Chancellor George Osborne delivered his Budget yesterday. See at a glance some of the announcements he made that may be relevant to your financial planning:
The limit at which people start paying tax will be raised to £10,000 in April 2014 (a year earlier than planned). As a consequence the basic rate limit for 2014/15 will be reduced to £31,865 and from 2015/16 the allowance will be increased by the CPI.
If you earn between £100,000 and £118,000 a year you gradually lose your personal allowance. But there are ways to reclaim this valuable tax allowance, which can yield worthwhile tax savings. Give me a call if this affects you.
The single flat-rate state pension of £144 a week has brought forward a year to 2016, index linked going forward. This simplifies the state pension legislation – to some extent anyway!
An interesting statistic for you: if you are a female aged 60 and want to buy a pension income of £144 per week, you would need a pension fund of around £250,000. So the state pension is still a valuable retirement benefit.
Following the recent announcements designed to make childcare more affordable and encourage parents back to work, 20% tax relief on childcare up to £6,000 per child from 2015 has been announced.
There will also be extra money for those on low incomes helping to keep parents in work.
Shared equity schemes are to be extended, with interest-free loans of up to 20% of the house value being made available for buyers of new-build properties.
Furthermore, bank guarantees to underpin £130bn of new mortgage lending will be extended for three years from 2014.
These steps will keep house prices artificially high and could come home to roost if house prices subsequently fall.
State of the Economy
The growth forecast for 2013 was halved to 0.6% from 1.2% in December.
Growth is predicted to be 1.8% in 2014
2.3% in 2015
2.7% in 2016
2.8% in 2017
It feels like more crystal ball gazing, I think I’ll try Mystic Meg instead . . .
The Bank of England’s 2% inflation target is set to remain, but the Bank’s remit is to be changed to focus on growth as well as inflation.
I question whether they really want to keep inflation at 2%, as a slightly higher inflation rate would erode the country’s debt at a faster rate.