Tax Facts!

Some key tax facts to remember for 2014/15:

Personal Tax Allowance: £10,000

Higher Rate Tax Band: starts at £41,865

Capital Gains Tax Annual Exemption: £11,000

Inheritance Tax Nil Rate Band: £325,000

Maximum Pension Lifetime Allowance:
£1.25 million
Residential Property Stamp Duty: the same as last year.

A NEW ISA

From 1 July 2014 the amount that you can put into an ISA will go up to£15,000 – about £4000 more than currently.

It will also be much more flexible than existing ISAs as it will allow both cash savings and stocks and shares in the one investment. And, boldly, it will allow cash held in existing ISAs to be transferred

to stock and shares and reversely, will allow investment holdings in ISAs to be transferred fully to cash holdings regardless of the amounts –all remaining within the ISA tax-free wrapper.

Savings Changes

To help pensioners who have been suffering from very low interest rates on their savings, the Chancellor has announced that in January 2015 he will be introducing a new “Pensioner Bond” for those aged over 65.

It will pay much better rates of interest than currently available. At this time it is estimated that the Bond will pay 2.8% for one year deposits and 4.0% for three year deposits. Up to £10,000 can be invested in each bond. He is also raising the cap on Premium Bond holdings in June from their current level of £30,000 to £40,000 and offering an additional million pound prize.

A BUDGET WITH PROMISE AND PROMISES!

The Chancellor’s March Budget was aimed primarily at helping UK businesses increase their production but it also includes a number of new measures affecting savings and pensions – some effective immediately and some promised for April 2015.

Pension Changes

The most revolutionary announcements relate to personal pensions. With immediate

effect those who are aged 60 and over can cash-in small pension pots – up to 3 different

pots and to a maximum of £10,000 in each pot. 25% of the pot can be taken as tax-free

cash with the balance being taxed as if it were earned income. The Chancellor has also

increased the “Triviality” limit whereby a pension fund of up to £30,000 can be taken as

cash (25% tax free) if that is the only pension benefit a person has. The promise is that by

April 2015 this freedom to access the money in your pension pot will apply to the whole

pension for those aged 55 and over. Here again 25% of what you take out will be tax-free

and the balance will be treated as earned income.

The Chancellor wants to enable everyone to be able to access their pension savings at any

time after age 55 and without having to purchase an annuity – although an annuity may

well still be the best choice for many. With immediate effect he is increasing the level of

income a person with an Income Drawdown Pension can take each year. Those who have

a guaranteed pension income of at least £12,000 will be able to access all of the money in

their pension fund.

ACT TODAY - MAKE SURE YOU USE YOUR TAX ALLOWANCES

In the run up to the end of the tax year, it's important that you consider all the tax-relief/exemptions and allowances that the Government offer. Please remember, many of these will be lost if you don't act before the tax year ends, on 5th April 2014.


You can manage your finances in a more tax-efficient way through:


- Savings - using tax efficient ISAs;
- Pensions - carrying forward any unused allowances;
- Investments - using up capital gains tax (CGT) exemptions and income tax personal allowances;
- Estate planning - inheritance tax (IHT) allowances and exemptions.


Do get in touch with us.

Income Please

Income please


After you have taken your tax-free cash

Option 1 Take a guaranteed income for life (Annuity).

Option 2 Receive a higher guaranteed income for life due to an adverse medical condition or medical history or history of smoking (Enhanced Annuity).

Option 3 Take a fixed income for a period of time (usually 5 years) and have a guaranteed amount left at the end so you can then review your options (Temporary Annuity).

Option 4 Get an income which can possibly increase depending on the underlying investments (Investment Based Annuity).

Option 5 Leave your monies invested with the option to draw an income from the fund itself (Drawdown). There are two possibilities here.

The first is called Capped Drawdown. With this one the maximum you can take is based on your age and the value of the pension fund. The second is called Flexible Drawdown. This allows you to take out as much as you want from your pension fund – but only if you already have a guaranteed pension income of at least £20,000 per annum (this can be made up of the State Pension and Private Pension income but cannot be made up of other earned income or investment income).

All as cash please !

If you are aged 60 or older and the total value of all your pensions is less than

£18,000, you can take it all as cash. 25% is tax free and the balance is taxed as

if it were income you had earned in that tax year. If you cannot take advantage

of that option, but have a couple of very small pension pots (£2,000 or less),

you can do the same with them – up to two such small pots per person.