Personal Finance changes in the 2014 budget affect us all and in particular people looking to take their pension monies and retire in the next few years.
- From 2015, pensioners will have be able to withdraw their pension funds as they like and will not be forced to buy an annuity at any point.
- From 27th March, the value of guaranteed income people need to qualify for flexible access to their funds will fall from £20,000 to £12,000. The total pension savings that can be taken as a lump sum will rise from £18,000 to £30,000. The capped drawdown withdrawal limit will be increased from 120% to 150% of an equivalent annuity. The maximum size of a small pension pot that can be taken as a lump sum will increase from £2,000 to £10,000.
- From April 2015, the 10p rate for low-rate savers will be axed.
- A pensioner bond will be open to everyone over 65 from January next year. A maximum of £10,000 can be invested. The Chancellor suggested a one-year bond might receive a return of 2.8% and a four-year bond 4%.
Savings & Investments
- From 1 July, cash ISAs and stocks and shares ISA limits will be merge to form a New ISA (NISA) limit that will be raised to £15,000 a year. This means that the entire £15,000 can be saved as cash or split as a saver or investor chooses. This will allow savings currently held in stocks and shares to be transferred to cash.
- Junior ISA (JISA) limits will increase to £4,000 a year.
- The limit that you can hold in Premium Bonds has been extended to £40,000 from June this year and will rise to £50,000 in 2015. The number of premium bond £1million winners will also be doubled.
- The personal allowance (the amount free from income tax) will rise to £10,500 on 6 April 2014.
- The higher rate tax band will rise to £42,285 next year
- The tax-break available under the new child-care system will be extended. From Autumn 2015, for every 80p parents spend on childcare the Government will add another 20p, up to £10,000 a year for each child – up from the £8,000 previously outlined.
Help to Buy
- It has been confirmed that the first-phase of Help To Buy, which gives buyers an interest-free loan of up to 20% of a deposit to buy a new-build home, has been extended until 2020.
As well as the above 2014 Budget Personal Finance changes, there were many changes on Duties which could strongly affect day-to-day spending and some movements in the markets.
Alcohol – Tax will rise in line with inflation, except on spirits and cider. Beer duty will be cut by 1p.
Tobacco – The escalator on duty at 2% above inflation will be extended until 2015.
Bingo – Bingo! The Chancellor announced that tax on the game will be cut from 20% to 10%.
Fuel duty – The tax will remain frozen.
Energy – A £7bn package has been announced to cut energy bills for businesses and households.