The Budget has been and gone and after Mr Osborne’s speech comes news of change to everything from business rates, consumer savings and even bingo.
With media access kept to a complete minimum, experts could only speculate as to what the rabbit in the hat would be this year, and it was Britain’s savers that would turn out to benefit from the big reveal. “Backing a Britain that saves” was the underlying theme of many of today’s announcements, with ISAs and pensions seeing the biggest changes.
The news that cash and stocks and shares ISAs will soon be merged into a single ISA with an increased limit of £15,000 from July was welcomed on all sides. The limit is set to rise from the current £5,760 cash ISA and £11,520 stocks and shares ISA and is a significant improvement for savers despite rates being at an all-time low. To combat the low returns currently offered on ISAs, it was announced in the main report and not in the speech, that peer-to-peer lending will finally be included in ISAs. This is great news as it means savers will soon benefit from tax free savings up in the region of 5% compared to 1.6%. We are obviously over the moon about this news and more details about this can be found on our blog.
Pensioners will see the biggest shake up in a generation which now allows pensioners better tax treatment of modern pensions, stating that withdrawing early from your pension pot will now be charged at a regular tax rate (usually 20%) rather than 55%. Pensioners will be allowed to withdraw the full amount and not be tied to annuities. Impartial advice will be offered to anyone eligible for these options to ensure that they are fully aware of the changes. Additionally a new market leading bond will be released from January, providing interest rates of 2.8% for one-year bonds and 4% for three-year bonds.
For all earners, the personal allowance will rise from £10,000 to £10,500, and the 40p tax threshold will go up to £41,865 meaning some people will benefit from staying within the basic tax threshold whereas others will be affected. The 40% tax rate will increase by 1% next tax year.
Good news came for day-to-day expenses, whether you’re getting to work in the morning or enjoying a swift pint at the end of the day. The chancellor announced a freeze on petrol duty and a cut of 1p from the cost of a pint of beer. Smokers may be disappointed with a 2% increase on tobacco, but those that enjoy a dance with luck at the bingo hall can look forward to a halved bingo duty, now down to 10%.
The general tone of the speech was one of productivity. “If you’re a maker, a doer or a saver: this Budget is for you,” was a notable quote in Osborne’s opening speech, as he broadcast that 1.3 million more people are now employed in the UK, beating the US for the first time in 35 years. The brand new pound coin was also publicised as a means of cutting counterfeit currency, although many criticised the chancellor for distracting people with “shiny new things.”
With the economy still far from balanced, and warning of Britain “borrowing too much and saving too little,” this year’s Budget has at least promised better circumstances for hard working savers, especially those that are prone to the odd bit of lending. To find if you are better off under the new Budget you can use the Guardian’s Budget Calculator to see how it impacts you.