Today marks the first working day of the new tax year. While the beginning of a new tax year is usually quite significant from a financial planning perspective, following the significant announcements made in the budget in March, this year is arguably more important than most.
Below you will find a summary of the main changes which are drastically different from previous tax years:
– Those clients in capped drawdown pensions can now withdraw up to 150% of the governments GAD (Government Actuaries Department) rate. This will mean a substantial increase in maximum income for some clients. A word of caution though, withdrawals at this new higher rate are unlikely to be sustainable for the whole of a retirement.
– Those who have £12,000 or more in guaranteed income from state pensions, occupational schemes or existing annuities, will now qualify for ‘flexible drawdown’. This system allows you to have complete access to your accumulated defined contribution pension pots. This facility will be available to all individuals from April 2015, so long as the budget gets through parliament successfully.
– Clients with smaller pension pots can now take up to 3 ‘small pots’ of up to £10,000 each in cash.
– People with total pension savings of below £30,000 can take the whole pot as cash under the ‘triviality’ rules.
– The above rules are a ‘stop-gap’ of sorts until the new pensions regime takes effect from April 2015.
– The government will consult on increasing the maximum age at which you can contribute into a pension from the current 75 and also consider whether to reduce the 55% tax charge on pensions on death.
– The ISA allowance for 14/15 is £11,880. This limit will increase to £15,000 when the new ISA (NISA) rules start to apply. Under the new rules, there will be no restriction on the amount you can save within a cash ISA (within the overall limit) and you will be able to transfer between cash and stocks and shares ISA’s.
– The junior ISA limit has now increased to £3,840 and will increase to £4000 on 1st July.
– The capital gains tax exemption is increased to £11,000.
If you would like to find out how the changes announced in the budget could effect your financial planning, please get in touch here.
