2014 Budget Summary How do the changes affect you?
George Osborne delivered his fifth Budget on Wednesday 19 March 2014.
It included
big changes to private pensions, some of which are already in effect, other more radical changes are proposed to take effect from 6 April 2015, changes to ISA allowances and also the introduction of a pensioners bond.
Here’s my summary of the changes from this year’s budget.
If you would like discuss any
area in greater detail please do let me know and I would be delighted to help.
ISA Increase From 1 July 2014, radically reform the ISA into a significantly simpler and more generous product, with an overall limit of £15,000 for cash and stocks and shares.
The amount that can be subscribed to a child’s Junior ISA or CTF in 2014-15 will also be increased to £4,000.
NS&I and Pensioners Bond Premium Bond investment
limits increase
from £30,000 to £40,000 now, and £50,000 in 2015/16, and offer two £1 million monthly prizes from 1 August 2014.
From January 2015 a range of fixed-rate, savings bonds for people aged 65 and over, taxable in line with all other savings income. Interest rates and investment limits will be confirmed at Autumn Statement 2014.
Personal Tax General details are in the table below.
2013/14
Starting rate (10%) Basic (20%) Higher (40%)
Additional Rate (45%) 60
£ a year 1 - 2,790
0 - 32,010
32,011 - 150,000 Over 150,000
The allowance before you start paying tax has increased to £10,000, with a further increase due for the following tax year.
This allowance can be higher dependent on your age. This means the pattern of the higher rate threshold is as follows: 2014/15 - £41,865 2015/16 - £42,285
Drawdown & Pension Changes Announcements in this area represent a significant change in pension flexibility. Although drawdown accounts have been around for many years, this change in rules led to many annuity providers seeing a sharp drop in their share value immediately after the announcement.
“I am announcing today that we will legislate
to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. No caps. No drawdown limits. Let me be clear. No one will have to buy an annuity.” George Osborne, Budget 2014
The changes The Chancellor was talking about are summarized as:
From 27th March 2014 •
Income requirement for flexible drawdown reduced from £20,000 to £12,000
2014/15
Starting Rate (10%) Basic (20%) Higher (40%)
Additional Rate (45%)
£ a year 0 - 2,880
0 - 31, 865
31,866 - 150,000 Over 150,000
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