Budget – March 2015

In what might be his last ever Budget, George Osborne delivered little of immediate benefit for investors.

The new flexibility in drawing ‘money purchase’ pension benefits comes into force on 6th April but this budget announced a further reduction in the Lifetime Allowance from £1,250,000 to £1,000,000 in April 2016. A new transitional protection will be introduced for those with pension savings already over the reduced £1,000,000 allowance.

It has been proposed to allow annuitants to sell their annuities from 2016/17. This will be subject to consultation but it is difficult to imagine a market which gives existing annuitants a fair market price for giving up their right to a guaranteed lifetime income. We shall see.

Flexibility to dip in and out of Cash ISAs without it counting to your annual ISA allowance will be introduced in the autumn but this flexibility does not extend to Stocks and Shares ISAs. The proposed ‘Help to Buy ISA’ will help first time buyers by adding a maximum of £3,000 to their savings but I can’t help thinking that this will be taken into account by a corresponding increase in property asking prices. 

Budget – March 2013

The income tax free personal allowance rises quicker than previously planned – to £9,440 in 2013-14 with the plan for it to reach the coalition’s goal of £10,000 the following year.

As previously announced the top rate of income tax of 50% for income above £150,000 reduced to 45% from 6th April 2013.

Also previously announced were the reductions of the pension Lifetime Allowance from £1.5m to £1.25m and the pension Annual Allowance from £50,000 to £40,000. Both changes take effect from 2014-15 but individuals who might be affected must take advice before then. There are ways of protecting pension funds against the Lifetime Allowance and the Annual Allowance changes can hit pension contributions made from 6th April 2013 because of the way in which Pension Input Periods are calculated. Please call us if you are in any doubt about how this affects you.

Corporation tax lowered to 20% from 2015 does away with the need for a ‘marginal’ rate of tax for companies with profits above the small companies limit.

We will wait and see how the proposals to offer interest free loans to buyers of new build houses will affect the property market. Any short term boost might be followed by a slump when the loans become no longer available. The net effect might simply be to elongate the overall stagnation period of the market.