“From austerity to prosperity”?

We all knew that George Osborne’s last Budget in March would have two eyes firmly on the forthcoming general election.  But with polling day just around the corner, what does it mean to us, the tax payers (and voters)?

The Budget is the Chancellor’s major political platform of the year – even more so when his announcements are made weeks before the country goes to the polls.  So it was no surprise that the coalition government’s 2015 Budget managed to hail economic recovery and gloss over spending cuts.  But it also served up a raft of measures designed, among other things, to support savers and first-time house-buyers.

Changes for individuals

• ‘PersonalSavings Allowance’ that will enable basic-rate taxpayers to earn up to £1,000 each year in savings interest, free of tax.
• More flexibility for Individual Savings Accounts (ISAs) that will allow savers to withdraw money and replace it – in the same tax year – without forgoing any of their tax-free ISA allowance. At present, however, this provision will apply only to cash ISAs.
• ‘Help-to-buy’ ISA for first-time house-buyers: The government will add a bonus of 25% to money saved by house buyers for their deposit, to a maximum of £3,000 on £12,000-worth of savings. 
• Pensions annuity changes: From April 2016, pensioners who have already purchased an annuity will be able to sell that income to a third party in exchange for a lump sum that will be taxed at their marginal rate, instead of the “punitive” 55% rate.
• Lifetime Allowance for pension contributions to be cut: From April 2016 it will be reduced from £1.25m to £1m. 
• The personal tax-free allowance to go up: It will rise from £10,600 in 2014/15 to £10,800 in 2015/16 and to £11,000 in 2016/17.
• Higher-rate tax threshold to rise: It will go up from £42,385 to £43,300 by 2017/18.

What might change

• Deeds of variation: Schemes to avoid inheritance tax through deeds of variation will be reviewed.

Changes to economic planning

The Chancellor also signalled that – if he is still in control at the Treasury – he intends to end the squeeze on public spending earlier than expected.  From 2019/20, he plans to let public spending rise in line with economic growth. 

This upbeat note came about as a result of encouraging economic statistics, signalling that the UK economy may have turned a corner.  Factors that influenced his thinking include:

• Economic growth: The UK economy expanded more quickly than any other major advanced economy during 2014, registering growth of 2.6% (although this was still lower than the 3% growth forecast in December 2014).
• Improved forecasts: The Office for Budget Responsibility raised its forecast for economic growth to 2.5% in 2015 and 2.3% in 2016 (although its forecast for 2017 was cut to 2.3%).
• Reduced national debt: Debt as a share of GDP is falling more quickly than previously forecast.

Of course, which of these measures come to fruition will depend a lot on the outcome of the general election on 7 May.  I will keep you posted as to what the outcome means for you and your financial future!

FOR EXPERT FINANCIAL ADVICE:

call Graham on 07740 192505 

or email gkinns@coreifa.co.uk 

to book a no-obligation consultation at our expense

Pension lump sums

The changes to pensions announced in the Autumn Statement came into effect this month.  Among them are significant changes to the taxation of pension lump sums.  This is what they mean, in plain English!

• Then: Previously, you could only take one lump sum from your pension.  You were allowed to take 25% of your pension pot free of tax; the remaining 75% had to be put into a drawdown account and any money that you took out of this was taxed at your marginal rate. 
• Now: You can now withdraw a series of lump sums, instead of only one.  What’s more, you can enjoy the first 25% of each new lump sum tax free, without having to enter into a drawdown policy; the remaining 75% will be taxed at your marginal rate.  

The political spotlight on pensions

Pensions have been at the centre of political attention for a while.  The March 2014 Budget introduced measures to allow retirees to spend their pension pot as they choose, rather than having to buy an annuity while, six months later, it was announced people are to have the freedom to pass on their unused defined contribution pension to any nominated beneficiary when they die.

Pensions saving is now clearly a major focus for politicians – we can expect this to continue no matter who wins at the general election on 7 May.  This means the pensions landscape is likely to continue to change, so it’s more important than ever to get expert advice on your individual circumstances. 

FOR EXPERT PENSIONS ADVICE:

call Graham on 07740 192505 

or email gkinns@coreifa.co.uk 

to book a no-obligation consultation at our expense

Pension changes come into effect

A new era in pensions began this month.  But what exactly does it mean for you and your retirement?

The pension changes announced by the Chancellor in the Autumn Statement were the most significant shake up to the system for decades.  The changes begin to come into effect this month, and will affect the financial planning of everyone who intends to retire at some point in the future, which is all of us who are still currently working!  So here’s everything you need to know about the changes and what they mean for you.

The good news

• Unlimited lump sums: From this month you draw down as much or as little as you want from your pension pot, though the income will still be subject to tax.
• More choices: The new lump-sum withdrawal option – 25% tax-free and 75% subject to income tax – has been added to the existing choices of annuitisation (investing in a scheme so you get an annual income, or annuity), drawdown and tax-free cash when individuals take their benefits.
• Reduced inheritance taxes on pensions: The 55% tax due on residual pension pots on the death of the pension holder has been removed in some circumstances.
• Benefits for spouses: If you continue to receive annuity income after the death of your wife or husband, you will now enjoy the same tax breaks as they did. 

The not-so-good news

• Tax loophole closed: New rules have been introduced to prevent people from exploiting the new system for tax reasons.  The quick among you will have worked out that the new system could have made it possible to make contributions that attract tax relief and then immediately make lump-sum withdrawals, a proportion of which would be tax-free.  But the Chancellor spotted this loophole and has restricted tax relief for people who access a pension under the new flexible rules: you will only receive tax relief on contributions of up to £10,000 gross each year afterwards. There are limited exceptions.

Something to bear in mind for the future

• Increased minimum pension age: Most of the changes to pensions are taking effect from this month.  But the Chancellor gave us an early heads up that the minimum pension age will increase from 55 to 57 from April 2028 onwards.  You have been warned!

FOR EXPERT PENSIONS ADVICE: 

call Graham on 07740 192505 

or email gkinns@coreifa.co.uk 

to book a no-obligation consultation at our expense

Introducing Core Financial Services

I am an independent financial adviser with Core Financial Services. Core are proud to be one of the country’s leading providers of independent financial advice.  What sets us apart is our commitment to make sure that our clients’ portfolios are invested in the best funds in the best sectors all the time. 

Most advisors review their clients’ portfolios once a year.  But an awful lot can happen in 12 months and failing to take timely action can make a real difference to your plans for the future.

So we have developed our unique Navigator proposition: we proactively manage your pensions and investments with regular reviews and quarterly reports to advise you of any changes we feel are necessary to optimise the performance.  This means we can respond swiftly to changing circumstances to protect your investments, minimising your losses and maximising your gains. 

We are completely independent, which means we have no pressure from outside to recommend products, and are directly regulated by the Financial Conduct Authority.  Specialising in pensions and investments, we are based in Maidstone, Kent.  

For expert investment advice, call Graham on 07740 192505 or email gkinns@coreifa.co.uk to book a no-obligation consultation at our expense