The budget introduced a number of well-trailed changes affecting pensions and investments;

 

Pension lifetime allowance to be reduced from £1.25m to £1.0m from next year.

 

Commentary; This will largely affect high-salaried public sector employees who have the benefit of a generous government-backed pension.

 

Annuitants will be able to sell their annuity to release capital.

 

Commentary; This will create a secondary market in annuities. Ironically those who are most likely to wish to sell their annuity (people in poor health) will receive the least for them. There are concerns that some may become poverty-stricken in their old age.

 

The tax-free personal allowance to rise from £10,600 in 2014-5 to £10,800 in 2015-6 and £11,000 in 2016-7.

 

Commentary; A modest tax-break for all earners, although National Insurance is still paid from a much lower starting point.

 

The threshold at which people start paying 40p tax to rise by above inflation from £42,385 to £43,300 in 2016/17.

 

Commentary; Those on middle incomes have been heavily squeezed in recent years. Higher-rate tax payers used to number a few hundred thousand, now there are millions of them.

 

Help to buy ISA; The Government will boost ISA contributions by 25% up to £12,000 if the proceeds are used for a first time house-purchase. It will be available on properties priced up to £250k outside London and £450k within the capital. Savers can withdraw capital from the account, but the bonus only becomes payable at the point the home is purchased.

 

Commentary; An interesting idea to encourage home ownership. In reality a modest boost that might cover the costs of the move. Grandparents might like to take advantage of this for their grandchildren, although lump-sum contributions are limited to £1,000 at the beginning, and must then be made at a maximum of £200 per month thereafter.

 

ISA allowance increases to £15,240PA.

 

£1,000 of savings interest will be tax free for basic-rate payers, £500 for higher-rate payers.

 

Commentary; A modest, but nonetheless welcome boost given that savings rates are so low. This makes Cash ISAs appear far less attractive compared to Stocks & Shares ISAs.

 

“Fully flexible” ISA will allow savers to withdraw money and put it back later in the year without losing any of their tax-free allowance.

 

Commentary; This is a great idea and will actually be of real use to some – usually people moving house.

 

Conclusion; No complaints about this year’s budget, although for us and our clients the big changes (relating to pensions) were announced in the last budget and the autumn statement. One wonders how long the new measures will remain on the statute books though, given that the election is only two months away.