Budget 2014- Changes for Savers

Tax Comments Off on Budget 2014- Changes for Savers

This budget aims to support savers, who have seen little reward while interest rates have been so low. All savers should benefit from a number of measures to be introduced at various stages over the next twelve months and the dates mentioned below are key to ensure you make best use of the opportunities on offer:

  • The ‘New ISA’ (NISA) will enable up to £15,000 per annum to be saved into cash and/or stocks and shares from 1 July 2014. The current annual limit is £11,520 (£5,760 for cash ISAs). Investors will be able to transfer existing ISA holdings into the NISA.
  • Junior ISAs for those under 18 will see the annual limit rise from £3,720 to £4,000.
  • The Premium Bond investment limit will increase for the first time since 2003 from £30,000 to £40,000 from June 2014, and to £50,000 from 2015. From August 2014 there will be two £1 Million prizes per month.
  • The “starting rate” of tax of 10% for low income saver will be reduced to 0% from April 2015. The amount of savings income that can benefit from the new rate will increase from £2,850 to £5,000 at the same time.

This will benefit those on low savings income that takes them above the personal allowance. Those who think they will benefit should consider registering with their banks or building societies to receive interest gross (i.e. without deduction of the usual 20% tax) to avoid the need to file tax repayment claims.

For those aged 65 and over, two new savings bonds will be launched from January 2015 by National Savings and Investments (NS & I). Interest rates are expected to be around 2.8% gross (1 year bond) and 4% gross (3 year bond).

If you have any queries please contact Sue Stephens or John Elliott.

For the full 2014 Budget Summary please click this link BWM 2014 Budget Report