There’s sleet in the air, so it must be spring. After being passed the Chancellor’s duties last October in a desire to be seen as a “safe pair of hands”, Jeremy Hunt announced his first Spring Budget last week.

Considering the economic environment with banks under pressure, the Chancellor stuck with a relatively muted budget with a number of tax increases (or allowance decreases) already announced, and he used last week to begin the first major pension reform since 2014.

The key points that might influence your financial situation:

• Pension lifetime allowance abolished

• Annual allowance into pensions increased to £60,000 per year (from £40,000)

• Government to continue to subsidise energy bills for another three months

• 30 hours free childcare for working parents extended to cover one and two-year olds

• Corporation tax increase remains in place; 25% tax for company profits over £250,000

• CGT allowance cuts also remain in place; falling to £6,000 next tax year, then £3,000 the following year

• Dividend allowance cuts also remain in place; falling to £1,000 next tax year, then £500 the following year

My view

The headline grabber is the removal of lifetime allowance. This is a great move and should continue to encourage individuals to save for their own retirements. The increase in annual allowance to £60,000 is certainly appreciated and a positive move. The tapering rules remain the same, however will start at the higher level of £260,000 instead of the current £240,000. With the higher £60,000 allowance per year, it also means the top-limit of the tapering comes in at £360,000 per year. At that level and above, someone can only put £4,000 per year into their pension. So whilst helping 80% of NHS consultants (as the Chancellor claimed), this clearly also helps a higher earning bracket of many other professions. Good news for you if you fall into that camp.

I have talked with many of my clients around the potentially expensive prospect of lifetime allowance and my consistent recommendation has been not to take action early because you never know what may happen. For once, it is nice to get something right and I feel justified in giving ourselves a little pat on the back for this. Flexibility is such a key, yet misunderstood, part of financial planning and this announcement simply reinforces that.

If you have any questions about how the Spring Budget will affect you, please get in touch.