A Budget Round up – March 2015

Thursday 26 March, 2015

Simon Prestcote, Chartered Wealth Manager, Lonsdale Wealth Management said: ‘Although no change was made to the annual pension savings allowance, the Chancellor has reduced the pension lifetime allowance – the amount of money that an individual can save free of tax, which is reduced from £1.25m to £1m in April 2016.  However, there was better news for many savers who will benefit from a new ‘personal savings allowance.’

Pensions

From April 2016 the lifetime allowance for pension savings that an individual can save free of tax will be reduced from the current £1.25m to £1m.  However, the lifetime allowance will rise in line with inflation from 2018.  No change was made to the annual allowance for pension savings that remained at £40,000 per annum.

The Chancellor has further relaxed the pension rules so that from April 2016 up to a further 5 million existing pensioners who have bought pension annuities can sell them with the agreement of their annuity provider and receive a lump sum or drawn down over several years. 

Savings & Investments

From April 2016 a new personal savings allowance will be introduced so anyone earning up to £1,000 in savings income will not have to pay income tax on any earned interest.  Any higher rate tax payers will benefit from a smaller personal savings allowance of £500.  Anyone earning over £150,000 will not receive the allowance.  As a result of these changes from April 2016 20% income tax will not automatically be deducted from any non ISA savings accounts.

The annual savings limit has increased to £15,240 for ISA’s and new rules will enable ISA investors to take out money and then put it back into their ISA later in that tax year without losing their tax free allowance.

The Chancellor also announced that he would review the ‘avoidance of inheritance tax through the use of deeds of variation,’ which allows wills to be changed after someone has died.

The Government launched the ‘Help to Buy ISA’ which will be launched in banks and buildings societies from Autumn 2015 to help first time buyers save toward a deposit for their first home.  There will be no minimum monthly deposit and for every £200 any first time buyer saves the Government will offer them an additional £50 of savings up to a maximum of £3,000. These will be available to any first time buyers purchasing homes up to £450,000 in London and up to £250,000 outside the capital. 

The Chancellor confirmed that the National Savings and Investment ‘pensioner bonds’ for over 65 year olds that went on sale in January and pay 2.8% for one year and 4% for three years will remain on sale until May 15th 2015.

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