The British government announces new measures to help savers
The Chancellor, George Osborn presented a budget 2015 with proposals to encourage savings.
These included radical measures that directly affect the taxation of interest on savings accounts, pensions, taxes of broadband internet, transportation and other indirect taxes such as alcohol, tobacco etc.
The key points are:
Personal Savings Allowance
When we talk about interest on our savings in bank accounts, the bank is taxed at 20% (in the normal range).
The Chancellor has announced that from 2016 the first £ 1,000 generated by these interests will be tax free, which benefits 95% of the population. Moreover, during the next 12 months (2015/16), until these major reforms become operational, whoever earns between £ 10,000 and £ 13,540 will pay no tax on interest.
Individual Savings Accounts (ISA)
The personal savings accounts, called ISA, are tax-free accounts with profits generated by them having a cap of £ 15,000. No matter if it is in cash, shares or mutual funds, as long as this amount is not exceeded.
The reform will increase the flexibility for these accounts and allow you to extract or deposit money during the fiscal year, without affecting the top of the 15k.
Help to Buy ISA
This is a savings account to purchase a home in the UK, with a 25% bonus. For every £ 200 provided (max. Monthly), the British Government will add £ 50 extra, up to a limit of £ 3,000 at the end of the period.
So, anyone who holds a “Help to Buy ISA” you can save up to £ 12,000 without paying taxes for interest, plus the balance up to £ 15,000 with the extra help from the government increased.
The bonus will only be paid for the purchase of the first house and to a maximum value of £ 450,000 in London and £ 250,000 for elsewhere in the UK.
As for the income tax personal allowance (the point at which each person begins to pay taxes on your income) this will increase from £ 10,000 to £ 10,600 available from April 2015, then to £ 10,800 in 2016 and up to £ 11,000 tax free in 2017. From that amount, 20% is taxed, as usual.
From October 2015, the minimum wage will increase to £ 6.70 / hour. That’s an increase of 3% so the minimum wage (net) for a normal working day (37.5h) will grow from £ 965 / month currently to about £ 998.
Petrol, alcohol and tobacco
The taxation of fuels will freeze for the 5th consecutive year, the price per pint will drop 1%. As to tobacco, there will be no further increases.
It does not seem much, but the British drink an average of 500 pints of beer a year, so the savings are substantial.
Osborne also changed the amounts to recover pensions, inheritance, amended the Tax Return to start processing it online in the future, and investments in mobile telephony and internet to increase the average speed to 100Mbps connection.
For further news on finance and tax, check out The Cheap Accountant