In the 2015 Budget Update announced on 18th March 2015, the chancellor George Osborne said that Britain is growing, creating jobs and paying its way.  He also claimed that the country was “walking tall again” after five years of austerity.

Mr Osborne seemed keen to make clear that his measures over the last five years had enabled the economy to grow by 2.6% in 2014 – faster than any other advanced economy but lower than the 3% predicted in the December autumn statement.

He also claimed that the Conservatives are; choosing economic security; choosing jobs and doing more to back business; choosing responsibility to support savers and pensions; choosing aspiration for the self-employed, small business owners and home owners and choosing families allowing hardworking people to keep more of the money they have earned.

Moving away from the rhetoric, in reality what does the 2015 Budget Update mean for you and the rest of the UK?

  • Relaxing pension rules from April 2016 providing up to five million existing pensioners with the option to swap their fixed pension income (annuities) for cash.
  • Reducing the pension’s lifetime allowance from £1.25m to £1m in 2016/17. The lifetime allowance is a limit on the value of pay outs from your pension schemes – whether lump sums or retirement income – that can be paid out without triggering an extra tax charge.
  • More flexible ISA Savings:
    • Annual allowance increasing to £15,240 from 2016
    • A fully flexible ISA allowing you to take your cash out and then put it back in without losing your tax free entitlement from Autumn 2015
    • Expanding on the investments eligible for ISAs
    • A ‘Help to Buy ISA’ from Autumn 2015 for first time buyers: Every £200 will be topped up by £50 by government – a 25% top up. There is a limit to the government’s contribution of £3,000.
  • Introduction of a new personal savings allowance from April 2016 with first £1000 of savings interest being tax free meaning 95% of savers would pay no tax.
  • Personal tax free allowance will be £10,600 from 6th April 2015, increasing to £10,800 in 2016 and £11,000 by 2017 – a tax cut for 27m people
  • Increasing the threshold for higher rate taxpayers from £42,385 to £43,300 by 2017/18 which he said was an above inflation increase

And we must not forget the ……..

  • A 2% cut on duty on whisky

Scottish Viewpoint:

The Chancellor was proud to announce that the Scottish Devolution Agreement will continue, but did his budget do enough to ease the fears of oil price collapse for the North Sea oil industry? According to the Scotsman, industry experts including Sir Ian Wood were yesterday relieved that the Treasury had listened to their warnings about the scale of potential job losses through oil companies disinvesting or choosing not to invest.  Estimating that the oil-related tax changes could cut the potential lob losses in the North Sea from 80,000 to fewer than 10,000, this is seen as fantastic news for Scotland.

If you have any questions or concerns over how the 2015 Budget Update changes could impact your financial plans, please feel free to contact us to discuss how we can help.

Note: The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. Any reference to legislation and tax is based on Bridge Investment Partners Limited’s understanding of UK law and HM Revenue & Customs practice at the date of production. These may be subject to change in the future. 

 

Angus Kirk

Financial Planner at Bridge Investments
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