A few weeks ago, the Chancellor of the Exchequer, Philip Hammond, delivered the Spring Budget, which set out the Government’s plan regarding spending throughout the year. One thing you may not know is that it will be the last Spring Budget, as it will be moved to autumn.
But how will the budget affect you? We’ve listed a couple of decisions that could affect things such as pensions and investments in the future.
Overhauled Tax Relief
As you may know, when you add to your retirement pot there are also contributions from your employers and a portion of tax relief. The amount of money that you earn annually dictates how much you get in terms of tax relief, meaning that:
- If you are a basic rate taxpayer, you will only be able to claim 20% back in tax relief
- If you are a higher rate taxpayer, you will be able to claim 40% back in tax relief
- If you are an additional rate taxpayer, you will be able to claim 45% back in tax relief
However, according to the Spring Budget, this isn’t likely to change anytime soon.
Introduction of the Lifetime ISA
As of April 6th, the Lifetime ISA will be available, meaning that younger adults will be able to save up to £4,000 every year and receive a bonus of up to £1,000 based on these contributions. According to the UK Government, these contributions are allowed until you reach the age of 50, and you will then be able to access it after your 60th birthday.
The Pensions Triple Lock
One of the most asked questions about pensions is regarding the triple lock. Currently, the lock is set to guarantee that annual pension increases by 2.5%. However, various MPs have stated that the policy is “unstable” and should be scrapped.
In the last tax year, the basic state pension rose by 2.9%, which is more than what was suggested by the coalition in 2010. The triple lock will stay in place until at least 2020 but, as of April 2017, the government has introduced a new flat-rate pension, with weekly payments of £159.55 to those who have at least 35 years of National Insurance contributions.
Pensions can be a difficult thing to understand, especially since they are commonly discussed in Parliament. Because of this, it’s important to discuss any questions you may have about certain decisions that emerge from Parliament with a professional; this is where Burton and Fisher come in.