The Final Budget
There seemed to be something for everyone, as one commentator put it on the radio ‘he is putting a bet on every horse in the race in the knowledge he will win something’
Even by Budget standards it was pretty political.
We have received a whole slew of summaries, breakdowns and opinion and it is our job to sift through the noise and try and give you what is relevant to our clients.
There are a few of key areas that will affect our clients.
- Reduction in pension Lifetime Allowance
- Consultation on sale of Annuities in payment
- Additional ISA flexibility
- Exclusion of renewable energy subsidies for EIS and VCT investment
Lifetime Allowance
We had been predicting some tinkering around the pension allowances and for once we got it right.
The Lifetime Allowance has been reduced to £1m from April 2016, and a new round of pension protection introduced.
This is going to be a particular problem for those in high paid public sector positions, GPs, members of the Judiciary and those with Final Salary pensions.
We would recommend that you speak to us as soon as possible to discuss your options.
There has been no mention of the Annual Allowance in this budget but it may raise its head in the next parliament.
Annuities in payment
The chancellor is going to consult on creating a 2ndhand market for annuities in payment.
This would involve a facility to essentially cash in your annuity for a lump sum which would be immediately taxable at your marginal rate.
As much as we are in favour of the pension freedom legislation we are rather sceptical about this and can see many problems along the, particularly for those who don’t seek advice.
ISA flexibility
You will now be able to transfer your ISA on death to your surviving spouse, they will receive an additional ISA allowance equal to the value of your fund to allow the transfer.
You will also be able to make withdrawals and replace money within your cash ISA within the same year without it counting towards your annual subscription.
We don’t see either of these measure as being particularly useful, the spousal transfer might save the surviving spouse a little tax and administration.
VCTs & EIS
We knew this restriction on these types of investments were coming down the line to prevent investors benefiting from Feed in Tariffs on renewable energy projects from 6th April.
There are lots of other investment options within these structures which still attract relief and we are happy to discuss these in more detail.
Apologies for the length of this weeks blog but I felt it was worth highlighting the key points above from the Budget.
Normal service will resume next week. In the meantime please feel free to leave me some feedback here.