The Chancellor may have gone for the popular phrase from Chancellors of yore by taking ‘a penny off a pint’, but what were the real big announcements during The Budget 2014? We summarise the 8 main points:
1. Changes to pensions mean many more options than just buying an annuity
In measures to be introduced in April 2015, pensioners will have complete flexibility on how much of their pension they want to take at retirement, effectively eliminating the need to buy an annuity. This opens up many more options for what to do with your pension in your retirement years.
2. ISA revisions are great for savers
The ISA limit was increased to £15,000 a year and it was announced that Stocks & Shares ISAs and Cash ISAs would be merged into a New ISA with effect from 1st July 2014. Again, this gives savers much more flexibility and potentially allows more of their income to be shielded within the tax free accounts.
3. New additions to the bonds market
A new Pensioners Bond will be introduced at the start of 2015 with what were described as ‘market leading rates’, thus giving pensioners another option for what to do with their newly released pension savings! There were also changes to Premium Bonds, with an increase in winners promised.
4. Personal tax allowance increase
The personal tax allowance was confirmed as increasing to £10,500 in April 2015, with the increase at the start of the tax year in April going to £10,000. Good news in that a little more of our money is saved away from taxation!
5. Small pension limits increased
For any small pension pots currently held, there was an increase in the total amount of individual pot that can be taken as a lump sum to £10,000. The Chancellor also announced an increase in the total number of pots, up to this size, that could be taken to three, meaning £30,000 could be taken in total.
6. Flexible drawdown limits reduced
In yet another pensions related matter for what was a busy Budget for the industry, savers now only need to have a minimum income requirement of £12,000 (as opposed to £20,000) in order to access flexible drawdown. This includes income from state pension, scheme pensions, dependants’ scheme pensions, and lifetime annuities, and dependants’ annuities.
7. Small measures for individuals and businesses; fuel duty, minimum wage and apprenticeships
Whilst these might not be the headline grabbers in overall cost terms, they will have an impact for many individuals and business owners. Fuel duty has been frozen in another attempt to get the current high costs down, whilst both the minimum wage and the number of apprenticeships were increased, with the Chancellor promising to ‘double’ the latter.
8. The new pound coin!
Perhaps it’s not actually one of the most important points from The Budget (though the Chancellor would point to the increased percentage of forged pound coins, which cost the economy) but it will certainly be one of the more visible ones when the new coin starts to enter circulation at some point around 2017.