As previously announced, individuals over 55 will have more flexibility in how to access their pension funds from 6th April 2015.
These options will include:
- Flexible access to pensions to draw the whole fund in cash, smaller lump sums or a regular income
- The ability to take the 25% tax free cash as part of one or several lump sums
- The ability to pass your pension to your beneficiaries on death as either a lump sum or a pension
In addition, it will now be possible for those already receiving an annuity to sell their annuities for cash without facing the existing high tax charges.
If you are planning for your retirement and wish to understand how Pension Freedom could affect your choices, why not ask one of our Partners or Principal Advisers for an introduction to an A4G approved Independent Financial Adviser.
Pension Lifetime Allowance
George Osborne announced that the amount that can be saved in a pension fund before an additional tax charge becomes payable will be reduced from £1.25 million to £1 million with effect from April 2016, representing the third such announcement by the current government.
It is expected that details of how individuals may avoid any additional tax charges for pension funds exceeding £1 million prior to April 2016 will be announced shortly.
Pension Annual Allowance
Unlike the reduction in the lifetime allowance, it was confirmed that the annual allowance for pensions will continue at the current rate of £40,000 for 2015/16.
In addition to the annual allowance for the year, it will also continue to be possible to use unused annual allowances from the previous 3 tax years, which in 2015/16 could mean a maximum contribution of £180,000.
One of the previous practical disadvantages of ISA’s are set to be removed.
With effect from Autumn 2015, monies may be withdrawn and subsequently replaced in an ISA without the loss of the tax-free savings treatment.
The annual ISA savings allowance will also increase to £15,240 from 6th April 2015 as previously announced.
Help to Buy ISA’s
As part of the government’s pledge to help first-time buyers on to the housing ladder, a new ‘Help to Buy ISA’ will be made available from Autumn 2015 for 4 years.
First time buyers will be able to save a maximum of £200 per month into these accounts with the government contributing £50 for every £200 saved, effectively allowing savings to be made gross of basic rate Income Tax. The government will contribute a maximum of £3,000 to such an account over a 4 year period.
The government bonus will only be paid once the saver buys their first home.
Personal Savings Allowance
From April 2016, a new personal savings allowance will remove the first £1,000 of savings income from Income Tax for basic rate taxpayers.
Higher rate taxpayers will receive a reduced allowance of £500 per annum, with additional rate taxpayers receiving no allowance.
Unlike the previously announced 0% income tax band for savings income effective from 6th April 2015, the personal savings allowance will not be limited to those with employment or self-employment income of less than £15,600.
Ebbsfleet Garden City Proposals
Following the exciting announcement of a new garden city to be built near to our offices at Ebbsfleet, the Budget report confirms that the consultation for the masterplan of the development will be started shortly.
A new corporation will also be tasked with the overall development, and particularly the analysis of required infrastructure. It is expected that this corporation will be operational by April 2015.
Fuel, alcohol and tobacco duties
‘£10 off a tank with the Tories’, George Osborne exclaimed as part of the announcement of the cancellation of the planned September increase in fuel duty, comparing what would have happened under the previous ‘fuel duty escalator’ proposals.
You may like to celebrate the news with a beer (1p off a pint), a glass of cider or a dram of whisky (both receiving a 2% decrease in duty), but wine drinkers will be less impressed with only a freeze in duty.
However, you might want to forget a cigarette or cigar – duty will rise on tobacco products at 2% above inflation from midnight on 18th March.