Budget 2015: Pensions and savings

In yesterday's blog, we made a handful of predictions about what George Osborne would announce in today's Budget. Pensions did not take centre stage like they did in last year's Budget, but the chancellor did make changes to a few areas we considered as well as a number of others. In this entry we look at a few of the changes:

Lifetime allowance

We thought there may be an increase in this to further encourage saving into a pension, but Osborne actually reduced it from £1.25 million to £1 million. The allowance will also be index linked from 2018, so that it is not affected by fiscal drag.

There were no changes to either the annual allowance or tax relief on pension contributions.

Reformed Help to Buy

We predicted that there would be changes to Help to Buy, and the chancellor introduced a Help to Buy ISA. With this, the government will contribute £50 to every £200 saved to help people get onto the property ladder. Another of our predictions was a new savings vehicle for younger people, and this new ISA will predominately be for the younger generation.

Personal Allowance

The personal allowance is the amount of money that can be earned before paying income tax. This is increasing to £10,800 in 2016-17, and will rise to £11,000 the following year.

Personal savings

A big change is the personal savings allowance - the first £1,000 interest on savings will be tax free (this reduces to £500 for higher-rate taxpayers). The chancellor stated this will take 95% of people out of savings tax. This changes the landscape for personal savings, and could marginalise cash ISAs to only the wealthy. ISAs also received a change, as the savings can be removed and put back without affecting the tax-free status.

What do you think of the Budget announcement? Let us know with a comment below

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new\

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