Budget 2014 Highlights
March 20th, 2014
The Government certainly pulled an enormous unexpected Rabbit out of that hat yesterday with a series of unparalleled pension reforms. There was also good news for savers with a more than anticipated boost to the annual ISA allowance.
Pensions Highlights
Immediate changes:
- Capped drawdown – increase the maximum you are able to drawdown from a pension to 150% of GAD
- Flexible Drawdown – Reduce secure income requirement to £12,000 from £20,000
- Triviality – Increased to £30,000 from £18,000
- Small Pension Pots – Raise limit to £10,000 from £2,000 for encashing
Proposed changes from April 2015
- Radical legislation will be introduced to allow those with Defined Contribution pension’s to draw down from their pension funds from age 55 subject to their standard rate of income tax, the initial 25% will remain tax free.
- The Government will also consult on a proposal to raise the age at which an individual can take their private pension savings from 55 to 57 in 2028, at the point that the State Pension age increases to 67.
- Reduce 55% tax charge on lump sum option on death on pension drawdown
Savings Highlights
ISA Allowances:
- From 1st July 2014 the ISA allowance will be increased to £15,000
- Equal limits from cash and Investment elements
- The junior ISA limit increased to £4,000
The Pensioner Bond
- The Government has also announced a new Pensioner Bond, available to everyone over 65, paying “market-leading” rates of 2.8% for one-year bond and 4% for three-year bond – up to £10,000 to be saved in each bond. The bond from National Savings and Investment (NS&I), will be available from 1 January 2015.
Other Savings
- The 10p tax rate for savers abolished.
- Cap on Premium Bonds to be lifted from £30,000 to £40,000 in June and £50,000 next year. Add an additional £1 million monthly prize
