The re-instatement of the triple lock is good news for all pensioners, but is particularly important for the 54% of pensioners who rely on it as their main source of income. The triple lock - a 2019 manifesto promise suspended last year because of Covid, means the State Pension will rise by the Consumer Prices Index inflation measure of 10.1%. This will increase weekly payments for the new State Pension from £185.15 to £203.85 from April 2023, taking the annual pension to £10,600.20, above £10,000 for the first time.
The triple lock was introduced in 2010, when the basic State Pension was £97.65 a week and it was designed to ensure that the State Pension kept up with prices or earnings.
The State Pension age rise review, published next spring could bring forward the timetable for increasing the State Pension age to 68 and potentially beyond.
Here’s our summary of the proposals with links to the documents if you would like more detail.
As expected, the personal allowance (the amount you can earn before you start paying income tax) remains at £12,570.
The amount people will have to earn before they pay income tax at 40% remains at £50,270 and will remain at this level until April 2028.
The Chancellor has reduced the amount you can earn before paying the additional rate of income tax of 45% from £150,000 to £125,140.
These changes won’t automatically apply to Scottish tax-payers, this decision will be made by the Scottish Government. The Scottish Government’s budget is on 15 December 2022.
The Chancellor confirmed National Insurance contributions from 6 April 2023 will continue at their current rates. To confirm, this means:
The Chancellor confirmed the proposed increase to 25%, planned for 1 April 2023, will take place.
The inheritance tax threshold will be maintained at the existing level of £325,000 until April 2028.
The ‘triple lock’ will still apply to State pensions. CPI was 10.1% in September 2022 which was greater than 2.5% and the increases in earnings so the new and basic rate pension will increase by 10.1%.
This means the New State Pension for someone with a full National Insurance contribution record will increase from £185.15 per week to £203.85 per week.
The Basic State Pension for someone with a full National Insurance contribution record will increase from £141.85 per week to £156.20 week.
The age state pension is paid is legislated to increase over the next 25 years. There will be a review of this published in 2023 which will consider whether the existing timetable remains appropriate.
The lifetime allowance remains at £1,073,100 for 2023/24.
The annual allowance remains at £40,000 for 2023/24.
The money purchase annual allowance remains at £4,000 for 2023/24.
Threshold income remains at £200,000 and adjusted income at £240,000 for 2023/24.
The adult ISA annual subscription limit for 2023/24 will remain unchanged at £20,000.
The junior ISA annual subscription limit for 2023/24 will remain unchanged at £9,000.
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow. All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.