What the 2017 Budget means for your savings and investments

8th March 2017 - Find out what the Chancellor said today

ISA allowances

• The ISA allowance will rise from £15,240 to £20,000 in April 2017, as already anticipated.
• The Junior ISA allowance will rise from £4,080 to £4,128.
• The Child Trust Fund (CTF) allowance will also rise from £4,080 to £4,128.

The new Lifetime ISA

• The new Lifetime ISA will be available for any adult under 40 from 6 April 2017, as planned. Please note that Chelsea will not be offering this product from launch but hopes to be able to offer it before the end of the next tax year.

NS&I bond

• The rate on the NS&I Investment Bond announced at Autumn Statement 2016 was confirmed today at 2.2% over a term of three years. It will be available for 12 months from April 2017. The bond will be open to everyone aged 16 and over, subject to a minimum investment of £100 and a maximum investment of £3,000.

Personal savings allowance

• From 6 April 2017, it will no longer be a requirement for bond funds to deduct 20% UK income tax from interest paid. Instead, interest from bond funds will be included in the Personal Savings Allowance (PSA). Basic rate taxpayers have a £1,000 PSA, higher tax payers have £500 and there is no allowance for additional rate tax payers. Any interest above the PSA will be taxed at 20%, 40% and 45% respectively, unless the bond funds are held in an ISA or SIPP.

Dividend tax-free allowance

• The dividend tax-free allowance will decrease from £5,000 to £2,000 in April 2018. This is the allowance that company directors or investors have for income received as dividends if the investments are held outside a SIPP or an ISA

Income tax and National Insurance contributions

• The personal tax-free allowance will be increased from £11,000 to £11,500 in 2017-18.
• The higher rate threshold will also be increased by £2,000 to £45,000 in 2017-18.
• The government had already announced that it will abolish Class 2 National Insurance contributions (NICs) – a flat-rate charge on the self-employed – from April 2018. Now the main rate of Class 4 NICs will increase from 9% to 10% in April 2018 as well, and rise to 11% in April 2019. This means that self-employed individuals with profits above £16,250 will have to pay more NICs.