After last year’s Budget geared towards the over-50s, George Osborne used what could be his last Budget announcement yesterday to further strengthen the ‘grey vote’ by unveiling more reforms that could impact those in or facing retirement.
To help you digest the chancellor’s latest measures, we share our round-up of some of the key facts which could affect your future finances.
- From 6 April 2016, five million UK pensioners with existing annuities will have the right to sell their annuities for cash. Osborne announced that they would remove the previous 55% tax and only charge pensioners their marginal rate.
- The lifetime allowance for pensions will be reduced from £1.25m to £1m in 2016.
- The personal allowance will rise from £10,600 in the coming tax year to £10,800 in April 2016 and then £11,000 from April 2017.
- ISAs will become more flexible, enabling people to take out their savings and pay them in again without losing the tax-free benefits.
- The annual ISA limit will also increase to £15,240 in April this year.
- From April next year, the first £1,000 of interest earned on savings will be tax-free for standard-rate taxpayers or £500 for higher rate taxpayers.
- The higher rate tax threshold will rise from £42,385 in 2015-16 to £42,700 in 2016-17, followed by a further increase to £43,300 in 2017-18.
- The transferable tax allowance for married couples will rise to £1,100.
Please bear in mind that the points above are Conservative government proposals. With an election in May 2015, we cannot be sure if any of these proposals will definitely go through. We will obviously keep you informed in due course.
We will also be informing those of our clients that will be affected by the possible reforms as and when necessary.