This week’s Budget looked as if it would be a difficult one for the Chancellor, with disappointing economic numbers and the need to avoid ruffling feathers ahead of June’s in/out referendum. Nevertheless, Mr Osborne did spring a few surprises, including some tax reductions.
So how does this budget affect you? If you are – or want to be – a saver, then there’s plenty to consider. A new Lifetime ISA will be introduced for the under 40s from 6 April 2017, with a Government bonus of 25%. The overall annual ISA subscription limit (including the Lifetime ISA) will be increased to £20,000 from April 2017.
Other important points included:
- The opportunity remains to increase pension funding using past unused allowances, between now and 5 April 2016, and beyond to benefit from higher rates of tax relief.
- Salary sacrifice is also still available – the Government confirmed pension saving can continue to benefit from income tax and national insurance relief when provided through salary sacrifice.
- The Lifetime Allowance reduction from £1.25m to £1m and the restricted (tapered) annual allowance will come into effect on 6 April 2016 as planned.
- Higher and basic rates of CGT will be reduced from 28% to 20% and from 18% to 10%, from 6 April 2016 – but not for certain residential property such as buy-to-let and second homes.
- Employer financed pension advice – the income tax and NICs relief available for employer-arranged pension advice will be increased from £150 to £500 from April 2017, ensuring that the first £500 of any advice received is eligible for the relief.