Can you believe we actually had a Budget last month? Whilst it seems like a distant memory, there were some key points and changes that will have an effect over the long term. A quick summary of anything we deemed important is below:
Tapered Annual Allowance – This was raised by £90,000 (adjusted income to £240,000 and threshold income to £200,000) and means that high earners, such as those in the NHS, will be less affected by tapering. However, the minimum that the taper can now be reduced to is £4,000 instead of £10,000, so those with income above £312,000 will only be able to put in £4,000 into a pension per year.
Annual Allowance – Remains at £40,000.
Lifetime Allowance – This continues to be increased by CPI and will be £1,073,100.
Allowances & Tax Bands – No changes to the personal allowance which remains at £12,500 or tax bands, with the higher rate remaining at £50,000 and the additional rate at £150,000.
Thresholds – The threshold at which employees will begin paying class 1 National Insurance increases from £8,632 to £9,500
Capital Gains Tax
Allowance – The annual Capital Gains Tax allowance will increase to £12,300 for individuals and to £6,150 for trustees of settlements.
Nil Rate Band – Not surprisingly this will remain frozen at £325,000 until April 2021.
Residential Nil Rate Band – This will increase from £150,000 to £175,000 as intended.
ISA & JISA
ISA – Remains at £20,000.
JISA – This will increase from £4,368 to £9,000.
Lifetime Limit – Entrepreneurs’ Relief means that Capital Gain Tax is payable at 10% on gains up to a lifetime limit. This limit is reducing from £10,000,000 to £1,000,000 with immediate effect. Any capital gains on the sale of businesses that exceed the limit will be taxed at 20% for higher and additional rate taxpayers.
Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.