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Tuesday September 26th, 2017 

Budget 2015

19/03/2015

No massive shocks in the final Budget before the election.

I will concentrate on pension and savings changes, rather than beer and cigarettes.

The Pensions Lifetime Allowance is being cut again from April 2016 - from £1.25 million to £1 million. This is the total value of pension benefts that you are allowed to accumulate before any penal tax charges are applied to the excess. The reduction in the allowance will hit higher earners, as well as people with high value pensions in final salary schemes. There will however be the ability to protect existing pension pots if they are already over the new limit. Pensions are getting less attractive as a tax shelter for the very rich - not necessarily a bad thing, because the more pressing need is to encourage everybody else to save for retirement. I thnk that the pension changes of the last 6 months have made pensions hugely more attractive to most people, for several reasons.

Plans are proceeding to allow people with existing annuities to 'assign' them to a third party in exchange for a lump sum. The thrd party will then get the annuity payments for the rest of the annuitant's life. Whether or not this idea takes off will depend how many companies are interested in entering this market. It is good in theory, but in practice the offers that people get for their annuities may not be very attractive, especially if they have any medical problems.

Cash savers had a boost with the introduction of a £1,000 savings allowance for basic rate taxpayers, meaning that the first £1,000 of bank interest per year is tax free. This allowance will seem less generous if and when interest rates go up again.

There was also the introduction of a Help to Buy ISA, which is a savings vehicle specifically designed for first time buyers saving for a deposit. 25% is added as a bonus by the Government, up to a maximum of £3,000 added to saving of £12,000. Some restrictions apply, and the accounts will only be active for 4 years.

Premium Bond limits are going up again in June, from £40,000 to £50,000 per person.

Call Mulberry Financial in Macclesfield if any Budget changes are relevant to you.  

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