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:
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.
Are you currently saving?
Calculate how much more you could be saving now.
Call 0800 304 7288 for a friendly chat about your pension
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
We are really looking forward to reading your comments. Before you start writing, please just remember that everything you write will be displayed publically – including your name. Not sure what sort of thing you can write, and what sort of things you should avoid? Please have a quick read of our social rules for guidance.
INFOPK - LIGHT
Be clear about your pension
Your free pack will explain your pension options, the pros and cons, and how getting financial advice could make all the difference for you; we just need a few details first. (Please see our privacy notice for information on our data practices here.).
Please note: all fields marked with an asterisk (*) are mandatory