Raworths LLP
Pensions and divorce Pensions and divorce

News / Articles

Apr 23

Pensions and divorce

Written by Ellie Foster
Legal Director

DDI: 01423 726621
M: 07548 213132
E: ellie.foster@raworths.co.uk

The treatment of pensions on divorce can be a complex area to navigate.  This is exacerbated if either or both of the parties to a divorce has associated potential or actual tax charges.

In addition to welcome changes to capital gains tax for divorcing couples, the Spring budget 2023 also introduced a number of changes to pensions legislation that will be welcomed particularly by high earners. They include:

  • The removal of the lifetime allowance charge from 6 April 2023 and the abolition of the lifetime allowance from the 2024-2025 tax year;
  • Increasing, from 6 April 2023:
    • the annual allowance for tax relief on pension savings in a registered pension scheme from £40,000 to £60,000
    • the adjusted income limit from £240,000 to £260,000
    • the minimum tapered annual allowance from £4,000 to £10,000
    • the money purchase annual allowance limit from £4,000 to £10,000

The low level of the annual allowance has been a particular concern for many high earners, such as NHS consultants, given the way in which the value of their pension is calculated.  There have been reports of individuals who have received a pay increment or a promotion, or indeed have taken on additional work to alleviate service pressure, only then to receive tax bills for many thousands of pounds for exceeding the annual allowance. The changes announced in the Spring budget may go some way to mitigate those concerns.

It is crucial for divorcing parties to understand the nature and value of all their pension benefits, as well as any risk of associated tax charges, in order then to assess how the pensions should be fairly treated on divorce.

For more information, please contact a member of Raworths Family team

Published on 11 April 2023

  • « Older Entries
  • Newer Entries »

‹  Return to News / Articles

Other News

Mar 24

The probate registry – is no news really good news?

As the old adage goes, “no news is good news”; however can this really be said for waiting for news from the new digitised and centralised Probate Registry? Five years...

MORE

Mar 24

Pre-nuptial agreements: helping to protect wealth on divorce

Raworths’ Head of Family Carmelita Ardren discusses pre-nuptial agreements as an important tool to protect wealth on divorce. Significant family wealth rarely “just happens”. It comes from years of hard...

MORE