What will George Osborne announce in the 2015 Budget?

When George Osborne unveiled last year's Budget, he dropped the bombshell that pensions would be more accessible than ever. The new pension rules are set to take effect next month, but Osborne is delivering the final Budget of this government tomorrow, and questions are being asked about what it will include. Here are some possibilities we think could be mentioned:

Lifetime allowance

This government has done a lot for pensioners, with the upcoming pension changes and the pensioner bond. A lot has happened in recent years to try to make pensions appear less confusing and more attractive as savings vehicles, so Labour's recent announcement that it would reduce the lifetime and annual allowance to fund a reduction in tuition fees might have ruffled some feathers. We could therefore hear an announcement that the lifetime allowance is being increased or perhaps remaining unaffected, although there could be an outside chance that it will be scrapped completely. 

Flat rate tax relief

Currently, tax relief is applied at the marginal rate of the earner, but a flat rate has been discussed widely in recent months. However, this may not be attractive to the chancellor: it will be tax neutral, and could alienate traditional Tory voters who pay higher rate tax. Public sector schemes, such as those for nurses and teachers, often rely on the higher rate tax relief too. However, a flat rate tax relief of 30% would appeal to basic-rate taxpayers, which could swing voters away from other parties.

Holding residential property in pensions

Existing rules allow commercial property to be held within a pension, but not residential property. Much is being made of pension funds being stripped to invest in the buy to let market (which we think is an overstated concern), and it may be the next step in pension freedoms to allow residential properties to be kept within a pension. This would be particularly appealing for landlords as they could be sheltered from capital gains tax, but it would be a complicated issue that could cause upset with younger voters.

Reformed Help to Buy

The government recently pledged new starter homes, sold below market value to first time buyers. The big announcement in December's Autumn Statement was changing how stamp duty is applied, all of which shows the property market is on Osborne's radar. That could open the door for changes to the Help to Buy scheme, perhaps increasing the interest free period from five years to ten.

New savings vehicle for younger people

The pensioner bond offered generous interest rates to the over 65s, so the chancellor may announce a similarly generous scheme for a different demographic.

What would you like to see in tomorrow's Budget speech? Let us know with a comment below.

 

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