Posted on: 25 March 2015
We bring you a summary of the key changes announced today
Before any General Election, 'The Budget' typically brings with
it a number of headline grabbers and today's was no exception, with
major changes announced to impact savers. Unsurprisingly, it was
intensely political, with George Osborne looking to out-manoeuvre
the opposition ahead of May 7.
The changes bring both good and bad news for savers. We have
provided a high level summary below but as always, please contact
us if you wish to discuss how these might impact you
Pension Lifetime Allowance to reduce from £1.25m to £1m
The current pension lifetime allowance of £1.25m will be reduced
down to £1m from April 2016. However, from 2018, it will begin to
rise in line with inflation.
The change will be seen by many as going against the ethos of
pension freedoms announced last year. As ever, we will wait to hear
more on the detail and importantly, what protection the Government
will offer savers with existing pensions close to or above the £1m
Retirees will be able to sell annuities from April 2016
Further to speculation this week, the Chancellor confirmed
retirees will be allowed to sell their annuity contracts for cash
from April 2016, without facing 'punitive tax charges'. The
government said, at present, people wanting to sell their annuity
to a willing buyer face a 55% tax charge or up to 70% in some
cases. Osborne said it would remove this 'punitive' charge so
people are taxed only at their marginal rate of tax. The Government
also said the Financial Conduct Authority (FCA) would be asked to
introduce guidance and consumer protection measures to prevent
A new fully flexible ISA will allow individuals to withdraw
money from their ISA and put it back in, within the same tax year,
without losing the tax free status. Under current ISA rules,
whenever a person takes money from their ISA, they are not able to
put it back in using the same allowance. For example, with the
current ISA contribution limited to £15,000 per annum, a
contribution of £3,000 would lower the remaining allowance to
£12,000. If that £3,000 was taken back out, the allowance would
remain at the lower level of £12,000. The changes, which make it
possible to withdraw money without losing the full allowance, will
come into effect from autumn this year.
The Chancellor also announced a new ISA scheme linked to the
Government's Help To Buy scheme.
For basic-rate taxpayers, the first £1,000 of interest will be
tax-free from April 2016. For higher rate taxpayers the first £500
will be tax-free. There is no change for top-rate taxpayers;
- The higher-rate tax threshold will increase to £43,300 from
- Personal allowance to increase to £10,600 from April 2015, to
£10,800 from April 2016 and to £11,000 from April 2017; and
- New measures will be reported in autumn this year around
inheritance tax avoidance.
How we can help
If you would like to know anything further or to understand how
the rule changes impact your personal wealth plans, please don't
hesitate to contact your Duncan Lawrie Relationship Manager.
Information provided in this article and opinions expressed are
for general information and not personal to your circumstances.
They are not intended to provide specific financial advice.