Let’s hope that the chancellor’s
budget keeps us out of a technical recession even if it feels like one. There
are also a number of initiatives to encourage people back to work and hopefully
‘inflation’ will continue to come down.
Most allowances and rates were not changed in the budget, so I will not repeat them here.
- The Life Time Allowance (LTA) charge on a pension of £1,073,100 has been removed
- The maximum tax free lump sum without LTA protection is fixed at 25% of £1,073,100 (£268,275)
- If you have LTA protection you can now top-up your pension again
- The pension annual allowance on contributions has been increased to £60,000 up from £40,000 from April
- For additional rate tax payers, the taxable ‘adjusted income threshold’ has been increased to £260,000. However, the ‘threshold income’ figure is to remain at £200,000.
- If you have started to take an income from your pension and then go back to work you are now allowed to reinvest £10,000, up from £4,000 (The Money Purchase Annual Allowance).
Voluntary NI contributions – If you have not started taking your state pension please check to see if you have any gaps in your contribution history via the government gateway https://www.gov.uk/log-in-register-hmrc-online-services . You require 35 years to receive a full pension and it is probably worth topping up if you are short. Before you hand over any money it might be an idea to check that its worth topping up by calling the Pensions Centre helpline 0800-731-0175.
The annual CGT exemption is to be cut to £6,000 from £12,300 in April. So please review your investments to see if you need to crystallise any gains and do this before 5th April.
The dividend tax allowance also goes down to £1,000 from £2,000 after April.
The Income tax free personal allowance of £12,570 and higher tax threshold of £50,270 are frozen until 2028. The 45% additional rate tax threshold will be lowered to £125,140 from £150,000 after April.
Please remember that if you are retired and one of you has a taxable income below £12,570, the marriage allowance allows you to transfer £1,260 to the other partner. Potentially saving £250 per year. If you have not claimed before, you can backdate it to 2018.
Additional childcare support will be phased in to help young families over the next 2 years.
The ‘Energy Price cap’ has been extended for 3 months. But please note that the government’s Energy Bill Support Scheme payment of £67 per month will end at the end of March.
The government have announced the Returnship initiative for the over-50s who want to retrain.
If you are affected by child benefit tax charge, this might be helped by topping up your pension to reduce your taxable income.
It might be an idea to top up your wine cellar as average duty will increase by 44p per bottle in August. At least the tax on a pint pulled in a pub has been frozen under the ‘Brexit Pubs Guarantee’.