Some of last month’s Budget announcements were more welcome than others. Of those changes that could be classed as positive, many are designed to encourage investors. These changes include; a consultation on the merging of Child Trust Funds (CTFs) and Junior ISAs, the abolition of stamp duty for AIM share purchases, the increase of personal income tax allowance and the single-tier state pension being brought forward to 2016.Child Trust Funds (CTFs) and Junior ISA merger consultation
No change is expected before April 2014, but the Chancellor has announced that he is looking into options for transferring Child Trust Funds to Junior ISAs. If such transfers are authorised, parents of approximately 6.1 million children will be given much greater freedom to choose the best option when saving and investing for their child (ren).
Abolition of stamp duty on AIM shares
Again this change will not take place until April 2014 but when it does, stamp duty (and stamp duty reserve tax) on shares in companies quoted on growth markets, including the Alternative Investment Market (AIM) and the ISDX Growth Market, will be totally abolished.
Single-tier state pension brought forward to 2016
It was announced during the Budget that the introduction of the single-tier state pension has been brought forward to 2016.
This news will be welcoming to many women especially, who would otherwise have suffered a double disappointment with both the sudden rise in their retirement age and then missing out on the new pension.
New tax allowances announced
The Budget also saw announcements of new tax allowances, a lot of which will be beneficial for those wishing to invest money. Some of these new tax allowances include; The ISA annual allowance, which has now increased from £11,280 by £240 to £11,520, The Junior ISA allowance which increased by £120 to £3,720, Capital Gains Tax allowance which rose to £10,900 and a planned future increase for Inheritance Tax which is set to increase to £329,000 in 2019.
Alongside these, income tax allowances have also changed. The additional rate will be reduced from 50% to 45%, the personal income tax allowance for those aged under 65 will increase to £9,440 and the higher rate threshold, (the sum of the personal allowance and the basic rate limit) will decrease to £41,450 in 2013/14, then rise to £41,865 in 2014/15 and £42,285 in 2015/16.
Pension annual allowance changes
Currently the annual allowance for pensions is £50,000. This will reduce to £40,000 in 2014/15. A lifetime allowance of £1.5m (tax year 2013/2014, reducing to £1.25m in 2014/15) applies. If you are a higher rate tax payer it’s always worth remembering that if you have a private pension to make sure you are receiving all the tax relief you are entitled to. If you are not you could be due a pension tax rebate.