Although politicians from all sides argue about levels of debt, rates of debt reduction and economic growth, the Chancellor made several announcements which – on balance – could have a positive impact to many of our clients.
Modest increases to ISA allowances and the Inheritance Tax threshold will allow people to save a little more and avoid unnecessary tax.
Greater impact though is the changes to pensions legislation.
The reduction in lifetime allowance to £1.25m and a cap of a £40,000 per annum contribution is likely to only affect the minority because the average yearly pension contribution is around £6000 (or £500 per month). For those affected by the contribution cap, there are alternatives to pension planning which could help meet any financial planning needs. We are happy to explain these if you think it applies to you.
The major positive impact is the re-introduction of the 120% GAD limit for those clients accessing their pensions under Drawdown. Whilst annuity rates continue to languish at record low levels, the direct increase of 20% in terms of income withdrawals will be very, very welcome.
If you want to discuss the budget statement or its impact please call or e-mail us.