The Chancellor’s Budget Speech focused on four key areas, which formed the foundation of proposed Government policies for the next few years.
As previously announced, up to five million pensioners are being given the opportunity to cash in their existing pension annuities. When the changes come in, savers will be allowed to take their whole pot in a single lump sum, or make withdrawals as they see fit.
The new flexible ISA will allow individuals to withdraw their savings and then make further investments up to their annual allowance, without being penalised, so long as the transaction occurs within the same tax year. From 6 April this year, the ISA allowance will be set at £15,240.
The Help to Buy: ISA, which combines an ISA with the Help to Buy scheme for first time house buyers, means that the Government will top up savings by £50 for every £200 saved. These ISAs are intended to help individuals save for a mortgage deposit. Government contributions will go up to a maximum of £3,000 per Help to Buy: ISA.
Additionally, the new tax allowance means that the first £1,000 of savings income will be free from tax for most individuals from April 2016.
The Chancellor said that these measures will create tax-free banking for almost the entire population.
