Amidst all the panic about coronavirus and lock down, did anyone remember that Chancellor Rishi Sunak gave his first budget on 11 March?!
We are now days away from the changes being implemented and, although there weren’t many major changes, there are a few things we felt we should highlight for you.
Individual Savings Accounts
Individual Savings Account (ISA)
- The main adult ISA annual subscription limit for 2020/21 will remain unchanged at £20,000.
- The Lifetime ISA can form part of this and is limited to £4,000 (of the above £20,000).
Junior ISA and Child Trust Fund
- The annual subscription limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.
- This means that 16/17-year-olds can save a total of £29,000!! (as they can also shelter £20,000 to a cash ISA in the same year).
Capital Gains Tax
Annual exempt amount
- The Capital Gains Tax annual exempt amount has increased to £12,300 (from £12,000) and £6,150 (from £6,000, 50% of normal amount) for Trusts.
Entrepreneurs’ Relief
- Entrepreneurs’ Relief lifetime limit is now a maximum of £1 million (was £10 million).
Pensions
Tapered annual allowance
- The minimum tapered annual allowance is decreased from £10,000 to £4,000.
- Threshold income, which is broadly total income before tax (less employee/personal contributions), is increased from £110,000 to £200,000.
- Adjusted income, which is broadly total income before tax plus employer contributions, is increased from £150,000 to £240,000.
- We will be releasing a blog going into more detail on this for high earners in the coming weeks and contacting clients who we know will be affected.
Lifetime allowance
- The lifetime allowance will increase in line with CPI for 2020/21, rising to £1,073,100 (from £1,055,000).
National Insurance Contributions
- Employees primary threshold limit for National Insurance Contributions has increased to £9,500 (was £8,632).
- Employers National Insurance employment allowance will increase to £4,000 (was £3,000).
Inheritance Tax
- The Nil Rate Band remains £325,000, the Residence Nil Rate band has increased to £175,000, giving a total Inheritance Tax free allowance of up to £500,000 per person on their estate.
If you have any queries about these changes or would like to relook at your financial planning strategy, then please get in touch with the team.