The budget saw some good news for savers and investors as well as a reduction in capital gains tax.
The main news was perhaps the raising of the ISA limit to £20,000 with effect from April 2017. In addition, a new Lifetime ISA is to be introduced in April 2017 for those under 40. They will receive a £1 top up from the government for every £4 they save, up to a limit of £4,000. This will be part of the total ISA allowance of £20,000.
Capital gains tax on investments has also been cut. From 06 April 2016, the higher rate has been cut from 28% to 20%, whilst the basic rate will be cut from 18% to 10%.
As per the recent media coverage, any planned changes to pensions tax relief did not materialise, so saving into a pension is still a very attractive proposition, particularly with employer contributions as well.
The Chancellor has also raised the earnings threshold at which you start paying Income Tax to £11,500 from 06 April 2017. Higher earners are currently paying 40% tax on income over £42,385, but this threshold will now rise to £45,000 from 06 April 2017.
On the economic front, the Chancellor announced downgraded growth forecasts, with growth now forecast to be 2.0% for 2016, down from 2.4%. However, George Osborne pointed out that UK growth was still forecast to be faster than all other advanced economies, and that employment was still at record levels.
For fuller details, or to discuss any matters arising from the budget, please don't hesitate to contact us.
Some of the key announcements in this Budget could also well have a bearing on your current and future financial plans. To review what action you may need to take to keep your plans on track, contact Kellands.