Chancellor George Osborne delivered the first Budget of 2016, making a number of points that will affect the way you save your money. This is being called “the Budget for next generation” but what does the this mean for families? We summarise the key points of the budget that will affect families and young people:
£20,000 ISA limit
It was previously confirmed in December that the personal ISA allowance will remain at £15,240 for the 2016/17 tax year. Today it was announced that it will rise to £20,000 for the 2017/18 tax year. This is a great boost and will give savers greater flexibility to plan for their future.
New Lifetime ISA
Targeted at people between the ages of 18 and 40, this will allow them to save up to £4,000 each tax year and receive a government bonus of 25%. That’s up to £1,000 a year until the age of 50. It can be taken as a cash ISA or stocks and shares ISA and savers will have the option of either using the money to buy a house, or keeping it saved or invested until the age of 60, when it can be taken out tax-free.
In two years time, the soft drinks industry will see the introduction of a sugar tax. Split into two bands based on the levels of sugar in produced or imported sweetened drinks (exclusions will be outlined for pure fruit juice and milk based drinks). The sugar tax is hoped to raise around £520m a year to be spent on doubling funding for primary school sport in England.
The Government aims to turn all schools in England into academies by 2022. This will end the role of local authorities running schools and would mean the end of the compulsory national curriculum and national pay scales for teachers. This will give schools more freedom to innovate and opt out of the national cirriculum, putting more power in the hands of head teachers over pay, holiday and term times.
The Chancellor also announced that Maths lessons could become compulsory for all pupils up to the age of 18. A review will take place to determine whether studying maths until children leave education will ensure the best start in life for employment.
Income Tax allowance rise
The Chancellor announced that the personal allowance will rise from £11,000 to £11,500 in April 2017. He also stated that the higher tax rate threshold will be raised at the same time from £43,000 to £45,000, taking more people out of the higher rate tax band.
Capital Gains Tax to fall
For higher rate taxpayers, Capital Gains Tax (CGT) on anything above your CGT allowance of £11,100 is falling from 28% to 20%. For lower rate taxpayers it will drop from 18% to 10%. This change doesn’t apply to gains made on residential properties.
Pensions to remain unchanged
Following industry consultation, George Osborne has held off from making any substantial changes to private pensions in this budget