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BUDget

18 March 2015

Taxation of inherited annuities

Beneficiaries of individuals who die under the age of 75 with a

joint life or guaranteed term annuity will be able to receive any

future payments from such policies tax free where no payments

have been made to the beneficiary before 6 April 2015. The tax

rules will also be changed to allow joint life annuities to be paid

to any beneficiary. Where the individual was 75 or over at death,

the beneficiary will pay income tax at their marginal rate(s).

Lifetime allowance

From 6 April 2016 the lifetime allowance for pensions will

be reduced from £1.25 million to £1 million. Transitional

protection for pension rights already over £1 million will be

introduced alongside this reduction to ensure the change is

not retrospective. The lifetime allowance will then be indexed

annually in line with CPI from 6 April 2018. There is no change to

the annual allowance, which remains at £40,000.

Personal savings allowance

From 6 April 2016 the government proposes to introduce a

new personal savings allowance to remove tax on up to £1,000

of savings income for basic rate taxpayers and up to £500 for

higher rate taxpayers. Additional rate taxpayers will not receive

an allowance. As part of these reforms, HMRC will introduce

automated coding out of savings income that remains taxable

through the PAYE system from 2017/18, with pilot schemes

starting in autumn 2015.

Peer-to-Peer (P2P) lending

A new relief will be introduced allowing individuals lending

through P2P to offset against other P2P income any losses from

loans which go bad, as previously announced. The change will be

effective from April 2016 and through self-assessment will allow

individuals to make a claim for relief on losses incurred on new

loans made from 6 April 2015.

Premium bonds

The planned increase to the NS&I Premium Bond investment limit

to £50,000 will take place on 1 June 2015.

think ahead

You should review

your retirement plans

especially if you are close

to drawing your pension.

The rules are changing on

6 April 2015 when there

will be new opportunities

to turn your pension fund

into cash.

>

think ahead

Maximise pension tax

relief while you still can.

The pension lifetime

allowance is currently

£1.25 million but it will be

reduced to £1 million in

April 2016. What’s more,

the annual allowance

of £40,000 could be

cut after the election.

Take advantage of the

generous carry-forward

rules to maximise your

retirement provision

while you still have the

opportunity.

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