2015 Budget Summary
George Osborne delivered his sixth Budget on Wednesday 18 March 2015.
Here's our summary.
Decrease in the lifetime allowance
There is a reduction in the lifetime allowance from £1.25million to £1 million. However this won’t take effect until 6 April 2016. The lifetime allowance will be indexed in line with CPI from 6 April 2018.
Transitional protection will be available, presumably along the same lines as the protections which applied when the previous reduction from £1.5 million to £1.25 million was introduced from 6 April 2014.
Pension freedoms to be extended to people with annuities
The government will legislate from April 2016 to allow people who are already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.
The Budget contained little of interest on inheritance tax. Is it possible that any significant changes to the current regime have been deferred until after the forthcoming general election?
The End of the Tax Return
The government intends to abolish the tax return for millions of individuals and small businesses through the introduction of digital tax accounts.
Personal Savings Allowance
Legislation will be introduced in a future Finance Bill to introduce a Personal Savings Allowance, for income "such as bank and building society interest" from 6 April 2016.
The allowance will apply for up to £1,000 of a basic rate taxpayer's savings income, and up to £500 of a higher rate taxpayer's savings income each year. It will not be available for additional rate taxpayers. For the avoidance of doubt it will be available in addition to ISA tax advantages.
Regulations will be introduced to extend the list of qualifying investments for ISAs and Child Trust Funds to include listed bonds issued by Co-operative Societies and Community Benefit Societies and SME securities that are admitted to trading on a recognised stock exchange, with effect from 1 July 2015. The government will also consult during Summer 2015 on further extending this list of qualifying investments to include debt securities (as announced at Autumn Statement 2014) and equity securities offered via crowd funding platforms.
Regulations will be introduced in Autumn 2015, following consultation on technical detail, to enable ISA savers to withdraw and replace money from their cash ISA without it counting towards their annual ISA subscription limit for that year.
Help to Buy ISA
From Autumn 2015, "Help to Buy ISA's" will be available from Banks and Buildings Societies and will allow people of age 16 and over, to save up to £200 per month, on top of an initial investment of up to £1,000, towards a deposit on their first property purchase.
As expected, the personal allowance will increase to £10,600 from 6 April 2015. The point at which higher rate tax is paid will increase to £42,385, ensuring that higher rate taxpayers also benefit from the rise in the allowance.
The personal allowance will increase to £10,800 from 6 April 2016 and to £11,000 from 6 April 2017 with the increases in the point at which higher rate tax is paid rising to £42,700 and £43,300 respectively.