Budget 2016

harz99

As an OAP with savings, I'm feeling underwhelmed with this budget which does little to nothing for my group.

Bluebirdman_of_Alcathays

harz99 wrote: »

As an OAP with savings, I'm feeling underwhelmed with this budget which does little to nothing for my group.

As you're already the most protected group in society - feel happy that the status quo has been maintained, perhaps?

onlyroz

For somebody who is good at maths. Assuming I am a higher-rate tax payer, I have £4k a year spare, I am under 40, and that I expect to be a basic-rate tax payer after retirement, should I put the £4k into my pension, or should I put it into the Lifetime ISA?

harz99

Bluebirdman_of_Alcathays wrote: »

As you're already the most protected group in society - feel happy that the status quo has been maintained, perhaps?

I guess so, grateful for small mercies and all that. I know i'll go and have a couple of beers in my local to celebrate before it closes.
:beer:

chucknorris

cells wrote: »

someone is looking after you Mr Norris....

a near 30% off your CGT bill

Not quite, the devil was in the detail. It doesn't do much for me, as it is easy enough to avoid CGT on shares anyway. I like the £20k ISA's though.

Jennifer_Jane

harz99 wrote: »

As an OAP with savings, I'm feeling underwhelmed with this budget which does little to nothing for my group.

Whilst I agree, technically, we (us pensioners) do benefit slightly from the triple lock (I know the difference between RPI and CPI, so use the word "slightly"), and certainly from the increased personal tax allowance.

As for your savings, there are many bank accounts which give good interest rates with limits, of course (TSB 5%; Nationwide 6% for a year; Tesco 3% and so on). In addition, as a basic rate taxpayer, interest is tax-free from this April.

I'm grateful for the things that haven't been changed - winter fuel allowance, bus pass, and that the levy on petrol has been frozen for the 6th year, which Labour had promised (and had been) increasing every single year. Good for business, and good for me.

Not a lot, perhaps, but for me, I am glad that the Chancellor is boosting businesses, especially small business to grow for the future, and helping younger people.

I liked the budget.

cells

chucknorris wrote: »

Interesting! It states:

This measure reduces from 6 April 2016 the 18% rate of CGT to 10% and the 28% rate of CGT to 20% for chargeable gains, except in relation to chargeable gains accruing on the disposal of residential property (that do not qualify for private residence relief), and carried interest.

I wonder what that means when you have lived in a property and rented it out, because in that situation you claim a pro-rata private residence relief. A possible loophole, but I'm not overly optimistic.

From the policy paper:

https://www.gov.uk/government/publications/changes-to-capital-gains-tax-rates/changes-to-capital-gains-tax-rates

Disposals of residential property and carried interest will be charged at the same rates as they are currently.

So I don't think any loophole will exist for properties that have been let, but also been a main residence too.

I should be happy really because it was tipped form some sources that CGT might be increased, so status quo was what I was hoping for, although for all of about 20 mins I thought that it has been cut.

Good news about the £20k ISA's though.

it makes it complicated in a case whereby you sell the home you are living in, but it was previously rented, is 20 or 28% due

For example you buy for £100k rent it out for 10 year, then live in it for the next 10 years and sell for £300k. Your gain is £200k of which half is due to the rental period so you pay CGT on the £100k but at what rate 20% or 28%

I can accept this is going to be rare but rare in terms of a million transactions a year could well still be thousands

michaels

onlyroz wrote: »

For somebody who is good at maths. Assuming I am a higher-rate tax payer, I have £4k a year spare, I am under 40, and that I expect to be a basic-rate tax payer after retirement, should I put the £4k into my pension, or should I put it into the Lifetime ISA?

Going to need a lot of maths - presumably you are not also a potential ftb?

Plus there is probably going to be a trade off between total money at pension age and flexibility - did you notice he suggested tha withdrawals from the pension isa before maturity (and thus bonus) might be allowed to be reinstated later on so the bonus is not lost.

chucknorris

cells wrote: »

it makes it complicated in a case whereby you sell the home you are living in, but it was previously rented, is 20 or 28% due

For example you buy for £100k rent it out for 10 year, then live in it for the next 10 years and sell for £300k. Your gain is £200k of which half is due to the rental period so you pay CGT on the £100k but at what rate 20% or 28%

I can accept this is going to be rare but rare in terms of a million transactions a year could well still be thousands

I have previously lived in 3 of my properties, and will be claiming both partial residential relief and lettings relief, but I think it is probably too optimistic to hope for a 20% rate on those particular properties. It was strangely worded though, I can't think why it was worded that way, because no CGT is due when a property has only been a main residence.

Further info from:
https://www.gov.uk/government/news/budget-2016-some-of-the-things-weve-announced

16. Capital Gains Tax rates will be cut from 6 April 2016, but residential property will still be taxed at current rates
Capital Gains Tax is a tax on the gain you make when you sell something (an ‘asset’) that has gone up in value. It is paid at a basic or higher rate depending on the rate of Income Tax you pay.

From April 2016, the higher rate of Capital Gains Tax will be cut from 28% to 20% and the basic rate from 18% to 10%.

There will be an additional 8 percentage point surcharge to be paid on residential property and carried interest (the share of profits or gains that is paid to asset managers).

Capital Gains Tax on residential property does not apply to your main home, only to additional properties (for example a flat that you let out).

onlyroz

michaels wrote: »

Going to need a lot of maths - presumably you are not also a potential ftb?

Plus there is probably going to be a trade off between total money at pension age and flexibility - did you notice he suggested tha withdrawals from the pension isa before maturity (and thus bonus) might be allowed to be reinstated later on so the bonus is not lost.

I am not a potential first-time-buyer and I am not so concerned about flexibility.


I imagine the "best case" would be somebody who can afford to put both £40k a year into their pension as well as £4k a year into the new lifetime ISA. I'm not one of those people. I currently pay about £5k a year into my pension but there is scope to increase this. I'm also not very far into the higher tax bracket.