Budget 2015 news

The Chancellor announced a range of new reforms, ahead of the general election this May.

If the Tories are re-elected, they will bring in a new “personal savings allowance” which will reward savers by not taxing the first £1,000 of savings income for basic-rate taxpayers, and the first £500 for higher-rate taxpayers. Additional-rate taxpayers, however, will not benefit. Osborne spoke of “supporting savers” and hopes that this reform would abolish the tax on savings for 17 million people.

Cash ISAs
In his announcement, Osborne spoke of making ISAs more flexible, with savers having the freedom to withdraw and replace money in the same tax year, without losing the tax advantage. With the ISA allowance being £15,240 in 2015/16, this opens up a whole world of freedom.

The government will allow ISA savers to withdraw and replace money in their cash ISA without counting towards their annual ISA subscription for that year, as long as the repayment is made in the same tax year as the withdrawal. These changes are set to be introduced in autumn 2015.

A new “Help to Buy” ISA scheme will help first-time buyers take that daunting leap onto the property ladder. For every £200 a first-time buyer saves into a Cash ISA, the government will top up the deposit with £50, up to £15,000 invested. Therefore, if a first-time buyer saves £12,000, the government will add £3,000 to the pot.

Help-to-buy ISA key points:

• New accounts will be available for four years, but once you have opened an account there’s no limit on how you long you can save for
• Monthly savings accounts will be available through banks and building societies from Autumn 2015
• An initial deposit of £1,000 is required when you open the account, and you can then go on to save on a monthly basis. There is no minimum monthly saving, but you can save up to £200 a month.
• Savings accounts are limited to one per person rather than one per home – so those buying together can both receive a bonus
• Only available to individuals who are 16 and over the bonus is available to first time buyers purchasing UK properties. Minimum bonus size of £400 per person; maximum bonus size of £3,000 per person.
• A bonus of up to £3,000 will be available per house purchase. The bonus can be used to purchase a property in London worth up to £450,000, or up to £250,000 outside of London, and will be paid when you buy your first home.

Pensions
The Chancellor reduced the pension pot lifetime allowance from £1.25m to £1m from next year, to offset other spending in the budget.

From April 2016, the government will also change the tax rules to allow people who are already receiving income from an annuity to sell that income to a third party, subject to agreement from their annuity provider. The proceeds of the sale could then be taken directly or drawn down over a number of years, and would be taxed at their marginal rate, the same as people taking their pension after this April.

Child Trust Fund to Junior ISA transfers
The Consideration of Commons amendments to the Bill took place in the House of Lords on 16th March. Both Houses have agreed to the amendments to the Bill and they are simply waiting on Royal Assent, when it will become an Act of Parliament.

At this stage we anticipate that transfers will be available next month.