The Budget plans of the chancellor George Osborne affect us all.
The biggest change this year seems to be regarding pensions. Pensioners will no longer be required to buy an annuity, but will be able to access their cash lump sum and use it as they wish. Although this change has been criticised as it could mean that some pensioners may become liable. As they may fall into a higher tax threshold, which means they will need to pay tax at this rate. This also means that they may need to pay the income tax earlier, rather than in stages. Pensioners will be able to obtain free financial advice to help make these decisions. However, this will not affect pensioners who have an existing annuity. On another note, pensioners who enjoy playing bingo will be pleased to hear that the duty on bingo has been reduced to 10%.
From January, the over 65’s age group will have the opportunity to save in a 1 year bond at a rate of approximately 2.8% or a 3 year bond at a rate of 4% if they wish to.
Many savers will be pleased to know that the tax-free limit on Individual Savings accounts has been increased to £15,000 and the 10p tax rate on savings will cease to exist.
To help families the Help to Buy scheme will extend to 2020. From next September the government will also provide 20% of childcare costs tax-free to parents who pay 80% of childcare costs to a registered provider. The chancellor will bring changes to fuel duty, which will benefit families by approximately £15 a year.
There will be an increase by 2% over inflation on tobacco and taxes on alcohol will increase above inflation, with the exception of ordinary cider and Scottish Whisky. However, beer duty will be cut by a penny which will reduce the price of beer.
The personal allowance will increase to £10,500 for everyone in 2015 to 2016. This will be a relief to many taxpayers.
So as the austerity plan continues and taking into account the economic situation, there does seem to be a few changes made, in an attempt to benefit the majority of people and balance out the economic situation in the UK.