It always takes a few hours for the detail and ramifications of a new budget to sink in.
Osbourne’s budget has been hailed as the “Beer and Bingo” budget – a fair comment? It certainly is good news for beer drinkers and bingo players but it has had a huge impact on pensions legislation in particular.
- There has been a major change to how people can take retirement benefits from their pension pots in that there is going to be flexibility going forward. Annuity purchase is no longer going to be compulsory and you will be able to access as much of your pension whenever you want (assuming you’ve reached the age of 55 [57 from 2028]) subject to your marginal rate of tax i.e. if you have a £60,000 pension pot you can take it all out at one time should you wish but you will have a hefty income tax bill that year. We are delighted to see this flexibility as it will offer a lot of valuable planning opportunities for our clients.
- Previously people with very small pension pots totalling £18,000 or less could take the whole lot out under triviality rules as a tax free lump sum – this increases to £30,000 from next week.
- Clients taking retirement income by way of income drawdown will be able to take more income from next week.The press has latched onto the idea that people maybe shouldn’t be trusted with full control of their retirement savings. For sure some will make silly choices and blow it all quickly but we have difficulty getting our clients to spend what they have so we don’t see this being a problem.
- Great news for Coleraine with the announcement of Northern Ireland’s first enterprise zone in our town. After the devastating DVLA job losses announced recently this is very welcome news. The site will be close to the University of Ulster and will accompany 5Nines’ £20million data centre at the same location.
- The ISA allowances are being increased considerably to £15,000 from July 2014 and will equalise cash and stocks & shares ISAs. ISAs will be known as NISAs (“New ISA”).
- Junior ISA and Child Trust Fund allowances increase to £4,000 per child.
- Savings income tax starting rate will be reduced from 10% to nil from 6 April 2015.
- The personal allowance will increase to £10,500 in the 2015/16 tax year.
- Inheritance tax nil rate band remains frozen at £325,000.
- Emergency services workers killed on duty will be exempt from inheritance tax.