NEWS

Government Budget 2016

Image

The 2016 Budget was announced by the Government on the 16 March 2016.

 

The Chancellor of the Exchequer didn't announce any changes to Pensions tax relief in his 2016 Budget. The main headline for Pensions was the new 'Lifetime ISA'. This initiative is intended to 'help young people save flexibly for the long-term throughout their lives'. From April 2017, people aged between 18 to 40 will be able to open a Lifetime ISA and contribute up to £4,000 in each tax year. At the end of the tax year the Government will provide a 25% bonus on these contributions. Savers could receive this bonus up to the age of 50. Subject to certain conditions from the age of 60 savers will be able to withdraw all the savings tax free.

 

Changes to income tax thresholds

 

The Budget also announced increases in income tax thresholds. The point at which you start paying various taxes has increased by more than some commentators expected. Most importantly, the chancellor revealed the tax-free personal allowance will be raised to £11,000 next month and £11,500 from April 2017. Similarly, the point at which you pay the higher rate of income tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017. The annual amount you can save in a tax-free ISA will also increase sharply to £20,000 from next April.

 

State pension rises

 

From April 6, the basic state pension will jump £3.35 to £119.30. The 2.9% increase is the largest seen in 15 years. This will prove a welcome boost to those in retirement. As we know, the new full state pension rate, which is only available to those who reach pension age this April, will be set at £155.65 a week.

 

For more information on the 2016 Budget and what this might mean for you and your Pension savings, please visit: http://www.bbc.co.uk/news/business/your_money