The recent budget speech delivered by George Osborne
threw up some interesting points and plenty for us to consider.
The lifetime allowance for pension savings will decrease
to £1million from 2018 (indexed in line with CPI). This sounds a lot and Mr
Osborne stated that only 4% of pension savers would fall above £1million,
however it will give some concern to anyone with substantial savings in a
pension wrapper. Prudent planning will be required to ensure that the new limit
is not breached. It is worth remembering also that the lifetime limit was
£1.8million just 3 years ago.
The government have promised to look into the use of
‘deeds of variations’ to deceased’s wills, and consider whether this should be
seen as IHT avoidance. Another planning need when considering the tax
consequences of your estate and how it will be divided upon your passing.
Savers should be pleased with several points in this
speech also. The removal of any tax liability on the first £1,000 of savings
income is a boost, and will be a welcome bonus to millions of savers. You could
be earning 2% interest on £50,000 of savings and currently losing £200 to the
tax man (basic rate), £400 (higher rate) or £450 (additional rate).
The help to buy ISA should assist many young people who
are finding it hard to save for a deposit on a property.
In all it was an interesting speech with plenty to
consider, and as usual will create opportunities and needs for sound planning
in many areas.
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