The Budget 2016 - Small Print
The full story of The Budget 2016 is set out in the Chancellor’s “Red Book”. Here are a few of the points not announced during the Budget speech itself:
At present an employer may pay £150 for an employee to receive pension advice and this is not treated as a benefit in kind. In other words the payment is not subject to tax and national Insurance. The government will now increase this figure to £500.
The government will also consult on the introduction of a Pensions Advice Allowance. This will allow people under the age of 55 to withdraw up to £500 tax-free from their pension to cover the cost of financial advice.
The Red Book acknowledges that pension saving can become “confusing”. The government will work with the financial services industry to ensure that a pensions dashboard is launched by 2019. This will allow individuals to view all of their retirement savings in one place.
This will fit in extremely well with the retirement planner software currently being developed by HDA.
At the present time an ISA ceases to be tax-exempt when the owner dies. This means that that income and gains arising during the administration of the estate are taxable. The government will now legislate so that the ISA savings of a deceased individual remain tax-exempt.
The government says it is “concerned” about the growth of salary sacrifice schemes, with clearance requests for such arrangements to HM Revenue & Customs jumping by more than 30% since 2010. As a result, the government is considering limiting the range of benefits that enjoy tax benefits when provided through salary sacrifice.
However, the likes of pension contributions, childcare and health-related benefits like Cycle to Work will continue to benefit from income tax and National Insurance relief for now.
Help to Save
Individuals who receive “in-work” benefits (such as Working Tax Credits) will qualify for a government boost to their savings. The “Help to Save” scheme, due to be launched no later than April 2018, will pay eligible savers a bonus of 50% on savings up to £50 per month over a 2 year period, i.e. a maximum bonus of £600. Savers may continue to use the scheme for a further 2 years and earn another £600.
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