Did you tune in to the Chancellor’s Budget announcements? How was it for you – do any of the proposed changes have an impact on you and your finances? Here’s our digest…
There was some good news for savers as the Chancellor announced that the Isa allowance is being changed to one single and simple £15,000 allowance. So instead of keeping £5,760 away for a rainy day, from 1 July you can bump that up to £15,000 (if you’ve got the money that is) and flit between cash and the stock market with your entire balance. And the 10p tax rate for savers is also to be abolished.
A new Pensioner Bond from National Savings & Investments will also be launched in 2015, with up to £10bn of these bonds issued and a maximum of £10,000 can be saved in each bond. These will pay 2.8% for a one-year bond and 4% in a three-year bond tax-free – well above current market rates.
And the Junior Isa allowance is increasing to £4,000 with transfers from CTFs to Junior Isa set to be allowed from 6 April 2015. Good news for all those who shared their concerns over not being able to turn their child’s trust fund into a Junior Isa over the last few years.
Major changes in pensions
George Osborne also announced a radical overhaul of pension savings and the ways that you can access them. The big announcement is that, from next year, you’ll be able to withdraw your entire pension savings in one go if you wish – no longer will you need to buy an annuity to convert your savings into an income. And you won’t face a 55% tax for doing so, just paying tax at your marginal rate.
But Mr Osborne also introduced some short-term changes. From the end of March, the income requirement for flexible drawdown will fall from £20,000 to £12,000 and the capped drawdown limit will rise from 120% to 150%.
The size of the lump sum small pot will rise five-fold to £10,000 and the total pension savings you can take as a lump sum will almost double to £30,000.
On the housing front, the first part of the Government’s Help to Buy scheme, Help to Buy equity loans, will now run until the end of the decade. Government-backed Help to Buy equity loans are available to help people with a 5% deposit to buy a new-build property. And Mr Osborne also announced that 15,000 new homes will be built in Ebbsfleet, Kent, as part of a new garden city development.
So what were your budget highlights – the new 12-sided £1 coin, the potential to boost your Isa allowance of the hope of changes to your potential retirement fund?
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