This month, George Osborne, the Chancellor of the Exchequer, has delivered his fifth Budget to the House of Commons. The new budget includes significant changes to savings and private pensions, as well as a few unexpected turnouts.
Here we will show some of the main areas of change and what these changes mean for you.
Personal Tax Allowance
From next year, the amount you have to earn before you start paying Income Tax rises to £10,500. Furthermore, the threshold for paying the 40% higher rate of Income Tax is increasing to £41,865 from April 2014 and after that, it will be increasing by 1% each following year.
Savings
There is a new single ISA which is created from the merger of Cash and Stocks & Shares ISAs. From the beginning of July 2014, the annual limit on how much you can save in an ISA is rising to £15,000. This will allow money to be moved from shares into cash which has been prohibited so far.
Furthermore, the Junior ISA limit will also increase to £4,000 a year.
There is good news for low income savers who will no longer have to pay a 10% tax rate on savings income. This new 0%rate will enjoy a larger amount of savings income from April 2015, going from £2,880 to £5,000.
Pensions
Pensioners will no longer have to buy annuity in order to access their pension savings and all other such limits are removed by the Government.
From April 2015, everyone who is retiring will be granted a free and impartial face-to-face advice.
Furthermore, if you decide to take all of your pension savings at the same time, this will be taxed as normal income, rather than at 55% rate as it is now.
Flexible drawdown, or the withdrawal of private pension pots, will be available to anyone who has an annual income of at least £12,000 from other sources. Before the amount was £20,000. Also, the amount of the pension that can be taken as a lump sum becomes £30,000, rather than the previous £18,000.
Air passenger duty
Soon reform is going to be implemented here too. From next year all long flights will carry the same lower band as flights to the United States of America.
Housing
Further reforms are expected in order to ensure that more homes are going to be built. Also, there will be £150 million to assist people build their own homes. There will be an extension of the current support for mortgage interest scheme to continue to 2016. Therefore, the Government claims nearly 200,000 new homes will be built as an outcome of these measures.