Further to speculation of what the changes might be during the Spring Budget, on 16th March Chancellor George Osborne made his speech, which appeared to bring a lot of good news for investors and savers.
Not only were pension taxes left untouched and the minimum income raised before having to pay tax, but a whole host of changes to ISAs were announced, coming in to play from April 2017. These include:
- The ISA limit increasing to £20,000 in April 2017.
- A new Lifetime ISA will be introduced in April 2017 for the under-40s.
- The allowance will be £4,000, which will form part of the £20,000 total ISA allowance.
- Investors will receive a £1 government top-up for each £4 saved, added at the end of each tax year.
- Investors can withdraw their capital tax-free to buy their first house (up to a value of £450,000), after the age of 60 or if terminally ill. Other exceptions may apply.
- Withdrawals at any other time will have a 25% charge.
- Capital gains tax on investments has been cut by 8 percentage points
- From 6 April 2016 the higher rate will be 20% and the basic rate 10%.
- This reduction will not apply to a gain made on a residential property which is not the individual’s main home (e.g. second homes and buy-to-let).
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Featured in Welsh Border Life May 2016