The past year has seen numerous changes introduced to help UK savers make their money go further. Primarily, last year’s Budget saw Osborne introduce Nisa savings accounts, giving investors greater flexibility to move their money between cash and stocks and shares and raising the savings threshold to £15,240. Alongside increasing the income tax personal allowance and scrapping the tax on ISA savings transferred to a surviving spouse, this has granted savers more freedom to plan for their future.
However, since these changes come at a time when Bank of England interest rates have been held at 0.5 per cent, some individuals are likely to feel the government could do more to incentivise saving. This is particularly true since, having previously expected an interest rate rise in the near future, city experts now predict the base rate is unlikely to move before 2016, expecting a minor 0.25 per cent increase at most.
With these challenging conditions in mind, savings experts are encouraging Osborne to consider several new policies to benefit savers. These include allowing pension holders to include property within their plan, given the rapid rise in house valuations over the previous year; tax breaks for those putting money aside to cover care costs; and an extension to the pensioner bonds scheme, launched in January.
Beyond these measures, support for younger savers and those on lower incomes has also come into the spotlight. Having already announced the tax-free income allowance will move to £10,600 after the 6th April, reports suggest Osborne may be looking to lift this threshold by at least £200 in the 2015 Budget, at a cost of around £1.3 billion to the Treasury. This represents the next step in the Chancellor’s pledge to lift the personal tax allowance to £12,000 by 2020.
As yet, it is unclear how the current government would fund this proposal, with the Huffington Post suggesting cutbacks may be made by reducing savings relief for high-earners. Chartered Accountants Johnston Carmichael take an opposing view, predicting the Conservatives could soon increase the higher income tax band to £50,000, after the government registered its highest single month surplus in seven years this January.
Join Aldermore on Twitter this Wednesday for live updates from #Budget2015 and information on how any changes will affect savers.
The content published on this website is intended to provide information only. The reader should seek advice from experts on the subject matter and independently verify the accuracy and relevance of any information provided here before relying upon it or using it for any reason. You can view our terms and conditions here.