George Osborne’s latest budget proposals have almost instantly met with considerable controversy, with many objecting quite vocally to the proposals to cut disability benefits and transition all schools to academies whilst others praise the proposal for a sugar tax. However, whilst these may be the headline-grabbing sections, the Chancellor’s 62-minute speech contained many other changes which could affect your finances.
As independent financial advisers, we recommend taking individual advice, but as an overview:
For those who will be under 40 years of age in April 2017, the most notable introduction in the budget was the Lifetime ISA. This new savings plan allows younger savers to put up to £4,000 per year into the Isa, and receive an annual 25% contribution from the government, a top-up which applies until savers reach the age of 50. Any mixture of investment can be chosen.
However, there are conditions on how you may spend the money you save in this way. Account holders will only be allowed to access all the funds, including the contribution from the government, without penalties if they are using it to purchase a first home of up to £450,000, if they have a terminal ill-health condition, or when they reach the age of 60.
For those able to benefit from this new Isa, it could be seen as a choice – to save for a house or to save for a pension. However, this savings account won’t make property any more affordable, and only benefits those who are already in a position to put money aside.
Adjustments to the personal allowance threshold of income tax (the amount of income you can earn before you start paying income tax) were already announced; next month it will go up to £11,000 for basic rate tax payers. However, an additional increase has now also been announced, bringing the personal allowance up to £11,500 in April 2017.
On the other end of the scale, the higher rate threshold, which is to increase to £43,000 next month, will also rise again next year, going up to £45,000.
These changes should, overall, mean a reduction in the amount of tax paid, putting a little more money in your pocket at the end of the month.
If you would like to speak to one of our team about how exactly these changes may affect your finances, and how to make the best of your money, get in touch with us to arrange a free, no obligation consultation.