Measures promote saving for the next generation

GEORGE Osborne said the measures outlined in his speech were intended to benefit ordinary working people and their families.

Measures announced covered pensions, savings as well as food and drink.

One of the standout announcements the Chancellor made was a lifetime ISA, allowing younger people major incentives to save for a pension or to buy a house; an approach which he said underlined the theme of this year Budget of putting “the next generation first.”

He admitted that under 40s had not had a good deal from the pensions system so the new measures propose that for every £4 saved by a person, the Government will add £1.
He said this would ensure that fewer people would have to make the choice between saving for old age or saving for a mortgage.

In doing so he said his intention was to make pensions more like the 401k of the US system.

It led commentators to question the role of personal pensions and auto-enrolment.

The Chancellor also announced that the tax-free personal allowance is being raised to £11,500.

He said 31m people will be paying less tax and 1.3m of the lowest paid taken out of tax altogether.

Mr Osborne also announced the higher rate threshold will rise from £42,385 to £45,000 from April next year.

TheBusinessDesk.com’s Budget coverage is brought to you in conjunction with EY. 

Rupert Hutton, Executive Director in EY’s People Advisory Services team in the Midlands, said on capital gains tax investors’ relief: “On a first reading this relief will be hugely attractive for Midlands businesses, but there will be a dawning realisation that it can be notoriously difficult to extract value from private companies and this may dampen the enthusiasm of investors.”

On the increase to the personal allowance, he added: “Many basic rate taxpayers across the Midlands will benefit from the increase to the personal allowance. However, for the lowest paid the personal allowance is already pitched above their earnings – an increase in the National Insurance thresholds would have had a more significant impact on their wallets.”

Elsewhere, insurance premium tax is set to rise by 0.5% to 10% with proceeds diverted to flood relief

From April 2018 employers will need to pay National Insurance contributions on pay-offs, such as termination payments above £30,000 where Income Tax is also due.

For people losing their job, payments of up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.