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:

Isas

• 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.

Pensions

• 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.

Property

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.

Your 4 simple steps to the financial future your deserve
Receive your FREE MoneyWeek Investor Starter Pack – 4 of our most popular investing reports, covering:

  • The best shares to buy in 2015
  • Where house prices are heading in 2015 and beyond
  • Why you should buy gold now
  • How to take full advantage of the new pension freedoms – AND avoid the pitfalls
Claim your Starter Pack today

• 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…

    Nicole
    Digiterre

MoneyWeek magazine

Latest issue:

Magazine cover
Why you should worry about Greece

...and how to protect your wealth

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

From ADRs to Z scores – all the terms you wish you understood, but were too embarrassed to ask about.

Gervais Williams: if you want real dividend growth, buy small-cap stocks

Merryn Somerset Webb interviews small-cap stock expert Gervais Williams about how penny shares outperform blue chips 'again and again'.


Which investment platform is the right one for you?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from, with varying fees and charges. Find out which is best for you.


2 July 1928: Women given equal voting rights with men


On this day in 1928, the Representation of the People (Equal Franchise) Act extended equal voting rights to women, lowering the voting age to 21.


Anatomy of a Grexit: how Greece would go about leaving the euro

Jonathan Loynes and Jennifer McKeown, economists at Capital Economics, look at the key issues and challenges of a Grexit, how it might be best managed, and set out a timetable for change.