A range of changes to savings, pensions and ISAs were announced in the Chancellor’s Budget on Wednesday.
Read on for the Money Advice Service’s summary of what the budget means for consumers as well as some tips from their Money Expert Andrew Johnson.
The Chancellor has abolished tax on the first £1,000 of savings income every year. For higher-rate (40%) taxpayers, this goes down to £500. In addition to this, savers will be able to access a new flexible ISA which will enable them to withdraw and deposit money into their ISA within the same tax year, without it affecting their annual ISA allowance limit. We know that those who save, even if it is as little as £3 a month, are better able to cope with unexpected costs which may otherwise plunge them into debt. You can read more about savings accounts here .
Help to Buy ISA for first time Buyers
A new ISA will be introduced to help first time buyers save towards the cost of buying their first home. Savers will be able to make an initial deposit of £1,000 when they open a Help to Buy ISA and then receive £50 for every £200 saved up to a maximum of £12,000. The tax break will be capped at £3,000. Although this will help first time buyers to get a step on the ladder, it is important to be fully aware of the cost of buying your home and how much you will need to save. Why not find out how much can you afford to borrow and use our Mortgage affordability calculator to work out the full cost of buying a home.
George Osborne also announced changes for pensioners. Existing pensioners will now have the ability to sell their annuity and take a cash lump sum. You can read more about retirement options here or why not take a look at out our Annuity comparison table.
The Money Advice Service has plenty of information available, just visit www.moneyadviceservice.org.uk .