Chancellor George Osborne delivered his fifth Budget on Wednesday 19 March. He said “This is a Budget for building a resilient economy. If you’re a maker, a doer or a saver: this Budget is for you.”
We have summarised the key points to consider below.
For Savers
- From 1 July, ISAs will be reformed into a ‘New ISA’ (NISA), with an overall tax-free savings limit of £15,000 per year.
- The Junior ISA limit will also increase from 1 July, to £4,000 per year.
- From April 2015 the 10% ‘starting rate’ tax band for savers will be reduced to 0% and the starting rate band for savings income will be extended from £2,790 to £5,000.
For Pensioners
The following changes will apply from 27 March:
- The minimum income requirement for Flexible Drawdown will reduce from £20,000 to £12,000.
- The maximum income from capped drawdown will increase from 120% to 150% of the limit set by the Government Actuary’s Department.
- Small pots lump sum limit will increase from £2,000 to £10,000 and the number of small pots you are able to take will increase from two to three.
- Individuals with total pension savings of £30,000 or less will be able to take them as a lump sum (trivial commutation), previously this limit was £18,000.
From April 2015 it is proposed that:
- Individuals over 55 will be able to draw up to 100% from their defined contribution pension savings (e.g. the personal pensions and stakeholder pensions), without the need to buy an annuity.
- Individuals will still be entitled to take up to 25% of their lump sum tax free. Any amount above this will be subject to income tax at their highest marginal rate.
Taxation
- From 6 April 2015, the point at which people start paying income tax will be raised to £10,500.
- From next month, the threshold for higher rate tax is to rise from £41,450 to £41,865 and by a further 1% to £42,285 for the 2015/16 tax year.
Household bills
- Increases in childcare support, meaning that eligible parents can now benefit from support worth up to £2,000 per child per year.
- Fuel duty rise planned for September will not take place.
- Tobacco duties will rise by 2% more than inflation.
- Most alcohol duties will rise in line with inflation. However, the duty on Scottish whisky and cider will remain frozen and the duty on beer will be cut by 1p a pint.
- From next year, all long-haul flight tax rates will be capped, wherever they’re going. Private flights will also be subjected to Air Passenger Duty.
