Budget 2015 Highlights
A budget for the savers – Anyone would think a general election was around the corner?!
A very bullish Chancellor outlined the final budget of this parliament on the 19th March and not unsurprisingly, much was made of the improved and improving economic position.
Having analysed the detail, we have picked out below the key points we expect to impact on your clients financial objectives and pension planning:
- Widely leaked in the papers beforehand, the pension Lifetime Allowance (LA) is to fall once more from its current level of £1.25m to £1.00m from April 2016. Transitional protection for pension rights already over £1.00m will be introduced alongside this reduction to ensure the change is not retrospective.
With just 4% of pensioners potentially affected by this reduction, the Chancellor is working on the basis of most pensioners (and voters!) being unaffected, a defence against the opposition argument that the Tories favour the wealthy and a saving on tax relief payments to boot!
- The Lifetime Allowance will be indexed annually in line with CPI from 6 April 2018.
- There was no change to the Annual Allowance (AA) contribution level.
- Pension annuities unlocked from April 2016 – pensioners looking to sell annuities might have to receive financial advice before doing so. The government will enter into consultation with the Financial Conduct Authority (FCA) on how this might be achieved.
- ISA flexibility- Savers will keep tax benefits when they take money out and put them back in the same tax year. The government is also currently consulting on extending the list of ISA investments to include peer-to-peer loans offered through crowdfunding platforms.
- Help to Buy ISA (first time buyers only) – Every £200 saved leads to a Government top up of £50. Couples who are saving for a home together can each open an ISA and receive double the top-up. A maximum of £200 can be saved each month into the ISA and the total amount of government help that can be received is £3,000. The Chancellor said the average deposit needed to buy a home is £15,000 ‘so if you put in up to £12,000 – we’ll put in up to £3,000’.
- Personal Savings Allowance – Savers won’t have to pay any tax on interest on the first £1,000, or £500 for higher rate tax payers.
Should you require any further technical information on how the Budget 2015 may impact your clients, please contact Kerry Houghton on 01772 550614 or via email firstname.lastname@example.org