Budget 2015

iltisman

£!000 tax allowance for savers . I see a lot of paperwork needed for savers who use multiple banks etc.

G_M

If tax on all savings accounts is being abolished, what's the point of an ISA?

Archi_Bald

G_M wrote: »

If tax on all savings accounts is being abolished, what's the point of an ISA?

All savings tax is NOT being abolished. Unless you get less than £1,000 in interest.

There are S&S ISAs, which will continue to be very valuable (assuming no Labour government), as well as the new Help To Buy ISA

gadgetmind

Hmmm, I wonder what abolishing Class 2 is going to involve? Does this mean that those not earning enough to pay Class 4 won't get a qualifying year for state pension? And this is being presented as something being done *for* the self-employed?

Archi_Bald

Here's what he said about savings

Savings
Mr Deputy Speaker,

This Budget takes another step to move Britain from a country built on debt, to a country built on savings and investment.

Last year I unlocked pensions with freedom for millions of savers.

But there is more to do to create a savings culture.

Today I announce four major new steps in our savings revolution.

They are based on the principles that cutting taxes increases the return on savings, and that people should have freedom to choose how they use those savings.

First, we will give five million pensioners access to their annuity.

For many an annuity is the right product, but for some it makes sense to access their annuity now.

So we’re changing the law to make that possible.

From next year the punitive tax charge of at least 55% will be abolished. Tax will be applied only at the marginal rate.

And we’ll consult to ensure pensioners get the right guidance and advice.

So freedom for five million people with an annuity.

Second, we will introduce a radically more Flexible ISA.

In 2 weeks’ time the changes I’ve already made mean people will be able to put £15,240 into an ISA.

But if you take that money out – you lose your tax free entitlement, and so can’t put it back in.

This restricts what people can do with their own savings – but I believe people should be trusted with their hard earned money.

With the fully Flexible ISA people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement

It will be available from this autumn and we will also expand the range of investments that are eligible.

Third, we’re going to take two of our most successful policies and combine them to create a brand new Help to Buy ISA.

And we do it to tackle two of the biggest challenges facing first time buyers – the low interest rates when you build up your savings, and the high deposits required by the banks.

The Help to Buy ISA for first time buyers works like this.

For every £200 you save for your deposit, the Government will top it up with £50 more.

It’s as simple as this – we’ll work hand in hand to help you buy your first home.

This is a Budget that works for you.

A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000 – we’ll put in up to £3,000 more.

A 25% top-up is equivalent to saving for a deposit from your pre-tax income – it’s effectively a tax cut for first time buyers.

We’ll work with industry so it’s ready for this autumn and we’ll make sure you can start saving for it right now.

So Mr Deputy Speaker:

Access for pensioners to their annuities.

A new Flexible ISA.

Backing home ownership with a first time buyer bonus.

And one other reform.

Today I introduce a new Personal Savings Allowance that will take 95% of taxpayers out of savings tax altogether.

From April next year the first £1,000 of the interest you earn on all of your savings will be completely tax-free.

To ensure higher rate taxpayers enjoy the same benefits, but no more, their allowance will be set at £500.

People have already paid tax once on their money when they earn it. They shouldn’t have to pay tax a second time when they save it.

With our new Personal Savings Allowance, 17 million people will see the tax on their savings not just cut, but abolished.

An entire system of tax collection can be scrapped.

At a stroke we create tax free banking for almost the entire population.

jimjames

Archi_Bald wrote: »

All savings tax is NOT being abolished. Unless you get less than £1,000 in interest.

There are S&S ISAs, which will continue to be very valuable (assuming no Labour government), as well as the new Help To Buy ISA

That's great news. I keep all of my cash savings outside ISAs so to be able to get that tax free will be excellent.

It does drop to £500 for higher rate taxpayers.

knack92

Here's information about the savings allowance:

1.222 In a radical reform to the savings tax system, a new Personal Savings Allowance will be created from April 2016, exempting the first £1,000 of savings income from any tax for basic rate taxpayers and the first £500 for higher rate taxpayers, saving up to £200 off an annual tax bill. This will not apply to additional rate taxpayers.

1.223 From April 2016, 95% of taxpayers can save completely tax free each year and choose from a range of savings products to meet their specific needs.

1.224 Because so many people will no longer pay tax on their savings, the automatic deduction of tax by banks and building societies will no longer be necessary. At present, 20% Income Tax is automatically deducted from most interest on savings outside ISAs. For those on low incomes, a 0% rate is applied, but only for those who have filled out a form to confirm they are eligible to receive gross interest. Higher rate taxpayers owe 40% tax and are therefore required to notify HMRC of their savings income so they can pay the additional 20%. Both the opt out and the requirement to notify HMRC are complex, burdensome and poorly understood. Budget 2015 announces that the automatic deduction of 20% income tax by banks and building societies on non-ISA savings will cease from April 2016. These changes represent a major tax simplification.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413949/47881_Budget_2015_Web_Accessible.pdf
Page 57

Kendall80

jimjames wrote: »

That's great news. I keep all of my cash savings outside ISAs so to be able to get that tax free will be excellent.

It does drop to £500 for higher rate taxpayers.

I keep the majority of my cash savings in high interest current accounts. As these are not strictly savings accounts I do hope the tax free interest applies to these too.

Reaper

Help to buy ISA - argh! Terrible idea.

All the "Help to buy" schemes are an illusion. With limited supply all it means is house prices go up in line with the buyers extra cash. No extra person gets to buy a house and we all have to pay increased taxes to pay for this idiotic giveaway.

I wish the government would stop interfering in the housing market.

Archi_Bald

My guess is that the £1,000 (£500 for HR tax payers) tax free interest on savings would be implemented by people having to give banks their NI numbers so the personal tax accounts (one of those new-fangled ones he has announced) can be updated. HMRC can then collect any tax that might be due. Or people will just have to declare interest that's above the tax free amounts. Who knows.

Not too much point to worry about it until we know the results of the general election.