Chancellor George Osborne has delivered the final budget before the General Election in May. We take a look at the key points in pensions, savings, tax and energy.
Osborne announced that pension pot lifetime allowance would be reduced from £1.25 million to £1 million from next year, saving £600 million annually. Pensioners will also be allowed to access their annuities, with 55% tax charge abolished and tax applied at the marginal rate, following a change in law.
There is also a new personal savings allowance – first £1,000 interest on savings income to be tax-free. The annual savings limits for individual savings accounts (ISA) has once again be increased, reaching £15,250. Saving accounts are also set to become “fully flexible”, with savers allowed to withdraw money from ISAs and put it back later in the year without losing any of their tax-free allowance.
A new ‘Help to Buy’ ISA has also been announced for first time buyers, allowing the government to top up by £50 for every £200 saved for a deposit.
The government set an aim of raising tax-free personal allowance to £10,000 by the next general election, and today announced that the allowance will be increased to £10,800 in 2015/16, from the current £10,600, and reaching £11,000 in 2016/17.
The threshold at which people start paying 40p tax is to rise by above inflation from £42,385 to £43,300, while transferable tax allowance for married couples will rise to £1,100. Annual paper tax returns are to be abolished and inheritance tax will also be reviewed though “deed of variation”.
For the energy sector, Osborne announced that petrol duty will be frozen and September’s planned increase has now been scrapped. The government is also cutting the supplementary change on North Sea oil producers from 30% to 20%, while petroleum revenue tax will fall from 50% to 30%. A new tax allowance has been unveiled to encourage investment in the North Sea.
In terms of renewables, the chancellor announced that negotiations are opening on a £1 billion tidal lagoon scheme in Swansea.
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