Budget 2014: The headlines

Osborne: surprise pension measures

George Osborne announced a big surprise at the end of his budget – major changes to the Isa and pension regime. Here are all the main changes announced in the budget:


• From 1 July, the Isa limit will rise to £15,000. Savers will be able to save the whole amount in cash, stocks and shares, or any combination.

• Existing Isas can be transferred between shares and cash – or vice versa – without any restriction. These restrictions will be lifted in July as well.


• Under current rules, anyone with a defined contribution pension can withdraw a 25% tax-free lump sum from their pot when they retire. If you take a larger lump sum, you have to pay 55% tax on the excess. Under new rules, you’ll only have to pay your marginal tax rate on the excess – 20% for most pensioners.

• More retirees will be able to go into ‘flexible drawdown’ with their pension pots. In other words, they’ll have complete flexibility on how much money they can withdraw. They’ll only need to demonstrate they have £12,000 in other pension income as opposed to £20,000 now.

• Anyone with a pension pot who is about to retire can receive free financial advice on what to do – a new ‘right to advice’.

New pensioner bond

A new savings bond for the over-65s will be launched. The interest rate on the one-yer bond will probably be 2.8%, with a 4% rate on the three-year bond.

Income tax

• The basic rate income tax personal allowance will rise to £10,500.

• The higher rate (40%) threshold will rise to £41,865, and then by 1% each year.

Growth  and debt

The economy is expected to grow by 2.7% this year and 2.3% next year. The deficit will be £95bn this year, falling to £75bn next year, and then moving into a £5bn surplus in 2018/19.


The new build element of Help-to-Buy will be extended to 2020. The mortgage guarantee element of the scheme, which isn’t just restricted to new build homes will run to 2016.

This article is taken from our FREE daily investment email, Money Morning
Receive our thought-provoking investment email every weekday morning plus occasional promotions & become a smarter investor.

Please enter a valid email address

To sign up, enter your email address:

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

  • NicoleH

    The pension changes could be great news for retirees. A cynic might wonder what this news was intended to take our focus on, however…


MoneyWeek magazine

Latest issue:

Magazine cover
Prime location

The best property buys in the eurozone

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.

27 May 1895: Birt Acres patents the Kineopticon

On this day in 1895, Birt Acres patented his design for the film camera, the Kineopticon – a decision that would doom his attempts to set up a business in early cinema.

The Kids' Portfolio: the four best funds to buy for your children

Investing for your children's long-term future is an excellent idea. But what should you buy? The Kids' Portfolio is a simple collection of four funds intended to be tucked away for 20 to 40 years.