Rishi Sunak’s first Budget contained a key pensions tax announcement. The income limits for the tapered annual allowance are to be increased by £90,000 each for the 2020/21 tax year. This is designed to ease the problem of senior clinicians leaving the NHS due to pension tax charges, but it applies to all high earners.

The first income test (threshold income) will be increased from £110,000 to £200,000 (threshold income includes all taxable income but excludes pension contributions). So, for anyone with income under £200,000, their 2020/21 annual allowance will be the standard £40,000. The second income test (adjusted income) includes pension contributions and is increased from £150,000 to £240,000. This is the point at which tapering of the annual allowance will begin (the standard annual allowance will reduce by £1 for every £2 by which adjusted income exceeds £240,000). The minimum annual allowance is being reduced from £10,000 to £4,000, so the latter will apply to those whose adjusted income is £312,000 or more.

There were also the following expected pension announcements on Budget day:

• the lifetime allowance will rise to £1,073,100 from 6 April 2020
• a call for evidence is due shortly on the issue of anomalous pension tax relief for non-tax payers
• the long-awaited consultation on reform to the RPI methodology has been published and is open until 22 April 2020 (its premise is that RPI will change, the key question being when).