George Osborne caused a stir…

In yesterday’s budget, George Osborne caused a stir with the introduction of two surprise measures: the sugar tax and the lifetime Isa. Despite being predicted by some, the government stayed clear of lowering the lifetime and annual allowance further, and also decided not to scrap salary sacrifice – something that was hotly anticipated.

Key announcements included:

·         The unveiling of a lifetime Isa to help young people save flexibly either for a first home or for their later years. The total amount you can save each year into all Isas will increase to £20,000 from April 2017.

·         The point at which you pay the higher rate of income tax will increase to £45,000 in April 2017.

·         Corporation tax will be cut to 17% in 2020 which is set to benefit over 1 million businesses.

·         The higher rate of capital gains tax will be cut from 28% to 20% and the basic rate from 18% to 10% in April.

·         Osborne’s radical stamp duty reform has been extended to commercial property so rates will apply to the value of the property over each tax band.

The government also announced it would consult on introducing a pension advice allowance which would allow people to withdraw £500 tax-free before the age of 55 from their defined contribution pension to redeem against the cost of financial advice.

It also made a number of technical amendments to support the pension freedoms drive including re-aligning the tax treatment of serious ill-health lump sums with lump sum death benefits.

 

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