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The 8 most important points from the 2014 Budget

The Chancellor may have gone for the popular phrase from Chancellors of yore by taking ‘a penny off a pint’, but what were the real big announcements during The Budget 2014? We summarise the 8 main points:

1. Changes to pensions mean many more options than just buying an annuity

In measures to be introduced in April 2015, pensioners will have complete flexibility on how much of their pension they want to take at retirement, effectively eliminating the need to buy an annuity. This opens up many more options for what to do with your pension in your retirement years.

2. ISA revisions are great for savers

The ISA limit was increased to £15,000 a year and it was announced that Stocks & Shares ISAs and Cash ISAs would be merged into a New ISA. Again, this gives savers much more flexibility and potentially allows more of their income to be shielded within the tax free accounts.

3. New additions to the bonds market

A new Pensioners Bond will be introduced at the start of 2015 with what were described as ‘market leading rates’, thus giving pensioners another option for what to do with their newly released pension savings! There were also changes to Premium Bonds, with an increase in winners promised.

4. Personal tax allowance increase

The personal tax allowance was confirmed as increasing to £10,500 in April 2015, with the increase at the start of the tax year in April going to £10,000. Good news in that a little more of our money is saved away from taxation!

5. Small pension limits increased

For any small pension pots currently held, there was an increase in the total amount of individual pot that can be taken as a lump sum to £10,000. The Chancellor also announced an increase in the total number of pots, up to this size, that could be taken to three, meaning £30,000 could be taken in total.

6. Flexible drawdown limits reduced

In yet another pensions related matter for what was a busy Budget for the industry, savers now only need to have £12,000 (as opposed to £20,000) in their pot in order to access flexible drawdown.

7. Small measures for individuals and businesses; fuel duty, minimum wage and apprenticeships

Whilst these might not be the headline grabbers in overall cost terms, they will have an impact for many individuals and business owners. Fuel duty has been frozen in another attempt to get the current high costs down, whilst both the minimum wage and the number of apprenticeships were increased, with the Chancellor promising to ‘double’ the latter.

8. The new pound coin!

Perhaps it’s not actually one of the most important points from The Budget (though the Chancellor would point to the increased percentage of forged pound coins, which cost the economy) but it will certainly be one of the more visible ones when the new coin starts to enter circulation at some point around 2017.

Sources: gov.uk

building your financial future

Financial Planning Week – Take action, don’t wait for tomorrow !

As the saying goes – ‘tomorrow never arrives’ so take the opportunity to do something this week – for Financial Planning Week, using our top tips – Technically, the United Kingdom is now out of recession. But every family will tell you that times remain tough. Even at the top end of the pay scale, the ending of child allowance early in 2013 will mean that a lot of people have far less disposable income.

With no sign of the economic good times returning in the foreseeable future, saving money is going be more important than ever in 2013 – both saving money now, and long-term savings for the future.

We’ve put together ten financial planning tips to help you do that.

1. Make use of your tax free allowances. Everyone over the age of 16 has an allowance for an ISA (Individual Savings Account). For the tax year 2012/2013 this is £11,280 of which £5,640 can be saved in a cash ISA (with those aged 16-17 only being eligible for a cash ISA). If you have money in the building society it makes sense to use your ISA allowance every year as there’ll be no tax deducted from your interest. Remember though, that the limit for this tax year only runs until 5th April 2013. After that a new tax year starts, and if you haven’t used your 2012/2013 allowance then it is lost.

2. Don’t neglect your other allowances as well. Everyone has a Capital Gains Tax annual exemption (£10,600 for the current tax year) but accountants will tell you that it is not used to shelter gains as often as it should be.

3. Although pensions have slightly fallen out of favour in recent years they remain a very tax efficient way of saving for your retirement, as you receive tax relief on the contributions you make. Many people are unsure of their pension benefits and/or the current value of their pension savings. Having a thorough review of your pension planning should be a priority for many people.

4. Check on your mortgage and life cover. Making sure that you have the most competitive rate on your mortgage and that you’re not paying too much for your life cover and other protection policies, or having cover when you don’t need it – this can be an excellent way to make some short term savings in your monthly expenditure, but don’t cancel policies just to save money, this could be a serious and costly mistake.

5. As well as making sure that you’re using your ISA allowances, you should also check on the rates you are receiving on your savings. Even though interest rates are generally low there is a still a big difference between the best and worst accounts. This is an area where a little shopping around or research online can pay big dividends.

6. Many children will be going on to further education, and with the new student loans scheme now in operation it makes sense to start saving as early as possible for the cost of university or college. With fees of up to £9,000 plus the cost of accommodation, many students are going to finish a three year course with debts approaching £50,000. With interest payable on this debt, many parents will feel that they don’t want their son or daughter to start working life with such a burden of debt, and will want to try and offset it in some way. The earlier you start saving the better.

7. Get rid of high cost debt. If you have debt – whether it is on credit cards or loans – then it makes sense to try and pay off the debt with the highest interest rate first. There are some attractive deals available on switching your credit card and taking action in this area can lead to significant monthly savings.

8. Although this isn’t an area we advise on, many of our clients have made considerable savings by checking how much they’re paying for gas and electricity. In some cases switching to a new provider can mean sizeable monthly savings, especially with costs of lighting, heating and power continuing to increase.

9. Clean up your credit file. It costs very little to obtain a copy of your credit file from Experian, and making sure that it’s an accurate reflection of your credit history is something well worth doing. Improving your credit rating could well mean that your future cost of credit is reduced, leading to long term savings.

10. Lastly, a piece of psychological advice! You’re almost certain to be more successful with saving if you’re saving for a definite purpose. Set money aside for your ‘holiday in Barbados’ or to ‘change the car.’ Apparently money that’s vaguely there ‘for a rainy day’ is all too readily accessed…

The economic climate is going to remain difficult, so saving money in the short term and building up your savings for the future are going to be more important than ever. Plan for the future don’t leave it to the game of chance ! 

As always, if you’d like any advice on your savings or you’d like to discuss specific savings objectives, then please don’t hesitate to contact us on 01737 225665 or advice@conceptfp.com