The Chancellor, George Osborne, delivered the government's latest plans for taxation and spending in his annual Autumn Statement yesterday. Whether you are a pensioner, saver or investor, the news will no doubt affect your future finances. With this in mind, Retirement and Investment Solutions highlights some of the key facts and changes that could have an impact on the over 50s.
- The overall annual Isa contribution limit will increase by 2.1% in April 2013, from the current level of £11,280 to £11,520.
- The inheritance tax nil-band rate will rise by £4,000, from £325,000 now to £329,000 in 2015-16.
- The basic state pension will rise by 2.5% next year to £110.15 a week.
- The annual pension allowance will be cut from £50,000 to £40,000. This will not come into effect until the 2014/15 tax year, however, giving many wealthier savers the opportunity to boost pension contributions now, although those who exceed the lifetime limit will face a tax charge.
- The standard Lifetime Allowance will drop from the current £1.5 million to £1.25 million from 2014/15.
However there will be a new ‘2014' fixed protection option to ‘fix' the level at £1.5 million. The ‘cost' is that no further payments can be made to money purchase schemes, and the annual increase in pension earned must not exceed the ‘relevant percentage'.
In addition it is proposed that there will be another Personalised Protection option on the table for those already above £1.25 million by 2014. This also allows savers to lock into a £1.5 million allowance, but still pay in to their pension.
- Child Trust Fund and Junior ISA subscription limits will both increase to £3,720 for 2013/14.
- The plans for the 3p a litre fuel duty rise planned for January has been scrapped.
- Pension drawdown limits will be raised by 20%, back to their pre 2011 level of 120% of the GAD rate. The fine details will be released in draft legislation in January, with the changes likely to take effect from April 2013.
- From April 2014 the main rate of corporation tax will drop 1 percentage point to 21%, boosting small- and medium-sized enterprises (SMEs). A new Business Bank will be set up to provide a £1bn boost to the small exports businesses and the annual investment allowance has been increased, meaning SMEs can invest up to £250,000 a year with full tax relief in plant and machinery.
- Personal tax allowance to rise to £9,440.
We will of course be advising existing Retirement and Investment Solutions’ clients at their review meeting about how these measures will impact on their personal circumstances.
In the meantime, if you have any questions, please contact Retirement and Investment Solutions on 01489 878300.