07 Apr Budget 2014
If you are a maker, a doer or a saver, this budget is for you,” Was Mr Osbourne’s strap line for the budget recently.
The main highlights of the budget were as follows:
A massive shake up in the pensions market mainly relating to annuities.
Savers encouraged by the changes to ISAs and the new Pensioner Bonds.
Businesses given a lift by the doubling of the Annual Investment Allowance (AIA).
Personal allowance to increase to £10,500.
A new one pound coin announced.
Extending the help to buy scheme.
A scheme to boost exports – doubling the amount of finance available to £3bn.
An extra £140m for repairs and maintenance to flood defences and £200m for potholes.
Cigarettes to go up by 2% above inflation
Scrapping inheritance tax for members of the emergency services who “give their lives protecting us”
A few lighter moments were provided by:
Halving of the tax on Bingos
1p off a pint
The likening of Ed Milliband to King John and the signing of the Magna Carta.
On the pensions shake up there has to be a word of caution.
Many commentators have suggested that giving the individual the choice will increase the tax take in the next few years as many people opt to take their full private pension pot as a lump sum and spend, spend , spend. The additional spending will boost the economy and bring increased vat revenues as well as the tax that will be due on the taxable 75% of the pension pot after taking 25% tax free.
However once this pension pot is spent over maybe four or five years these people will be relying on the state to provide them their income for the rest of their lives.
Many individuals have welcomed the proposals as it will give them the flexibility to do what they want with their pension pot rather than having to tie it up in an annuity whose returns have suffered in recent years and currently offer around a 6% return.
I think on the whole the pension changes are very positive.
Read our budget report at https://www.egan.co.uk/tax/budget-2014