March 16, 2016
- Rise in Insurance Premium Tax from 9.5% to 10%.
- No change for pension customers but there are more options for under 40s.
- Good news for savers.
- Good news for investors - Immediate reduction to Capital Gains Tax.
- Family income changes.
Insurance Premium Tax
Insurance Premium Tax rises by 0.5% from 9.5% to 10% from 1 October 2016 leading to higher premiums for insurances such as car, house and pet insurance. The tax paid on a £50 premium would rise from £4.75 to £5.00. The money raised by this additional 0.5% will be used to enhance flood defences in Leeds, York, Calder Valley and Cumbria and for maintenance of existing defences.
- No change to tax relief on the payments you make to your plan
- No change from the budget to how much you can pay in to your pension
- No change to the amount of tax free cash you can take – 25%
- No change to how you can take your pension fund as an income.
- To help you with pension decisions, you will be able to take £500 tax free from your pension to pay towards cost of financial advice. This will be introduced at a later date.
The reasons you may choose to save for your pension are unchanged especially if you are aged 40 or over.
Savings and Investments
- You will be able to save up to £4,000 a year with the government adding 25% to the amount you save.
- You will be able to use this towards buying a first house with the balance being available from age 60 as pension.
- Find out more about the proposed new lifetime ISA
If you are aged under 40, you will need to consider what is best for your circumstances and, where you might choose to hold your on-going savings, ahead of the introduction of the Lifetime ISA.
Good news for savers
From 6 April 2017 the maximum you will be able to invest in to an ISA is £20,000 each year.