Pensioners and savers may want to consider employing the services of accountants and financial advisers to ensure they make the most of some of the biggest tax reforms in decades.
Chancellor, announcing the Budget, said the government was committed to supporting people who had worked and saved hard throughout their lives, and it was carrying out the biggest pension-related tax overhaul since 1922, when the original regime began.
This means that even those people who have never had an accountant or financial adviser before may want one now. The internet has made this sort of service easy to find, offering search engines that can locate a firm just seconds after the user types in a search term such as ‘accountant Manchester’.
People to Reap Rewards for Good Budgeting
In previous years, savers have suffered because of low interest rates and measures to help an economy that was struggling to recover, but chancellor said that the time had arrived when people should be repaid for the sacrifices they have made to ensure funding for their retirement.
The Budget’s tax reforms will mean that the 10p tax starting rate on savings income will no longer apply, and there will be a new limit of £15,000 applied to ISA tax-free savings. The overhaul will make it cheaper and simpler for people to take cash straight from their pension pots rather than having to purchase an annuity, and there will be Pensioner Bonds introduced to give better rates of interest to savers who are over the age of 65.
There was more good news on taxation when chancellor announced the raising of the income tax personal allowance to £10,500, meaning that people will only have to pay tax on the amount they earn above this figure.
More People Will Pay 40p Rate
The starting figure for payments in the 40p income tax band, however, will rise by just one per cent each year, meaning that more workers on middle-incomes will have to start paying this rate. This has long been a contentious issue in the UK, even amongst MPs in the Chancellor’s own party, who are concerned that too many workers will soon be paying the 40p tax rate.
Chancellor defended the move, which went against the wishes of many Conservative MPs, by saying that the combined effect of the tax reforms will actually be beneficial to those classed as middle earners. He said that the Budget would mean that those workers whose salaries were under £100,000 would pay lower amounts of income tax.
The Budget, Chancellor, also included the doubling of the yearly business investment allowance to £500,000, a 1p cut in beer duty, the suspension of a planned fuel-duty rise and £200 million of funding to help local councils repair potholes in roads that have been caused by the recent bad weather.
Chancellor used the Budget to claim that there are currently no other major advanced economies beating Britain in terms of economic growth.