If you’re in the UK, you need to be aware of the latest Budget news that came out today.
Cash and Stocks and Shares ISAs to be merged into a single New ISA. They’ll still work the same, allowing you to save both in cash and using investments, with the returns hidden from the tax man. Winning.
Increased ISA allowance
The annual allowance to be increased to £15,000 from 1st July. This is the amount you can save each year, although if you take any money out you can’t put it back in if you’ve gone over your input allowance.
Increased Junior ISA allowance
The annual allowance to be increased to £4,000 from 1st July. This is great news as it allows you to save more for your children, without worrying about tax. If you don’t use these accounts then your children’s savings are taxed at YOUR rate…even if it’s in their name.
There will be greater access to pension pots and no requirement to buy an annuity. I love this one…because saving in a pension is a great way to save money on taxes…but they are less flexible than ISAs. But, the rules are getting more flexible over time.
The 10p tax rate for savers will be abolished from April 2015. This is less good news. Currently if you don’t have much income, your savings get taxed a little less (10% rather than the standard 20%). It only really applies to those with very small incomes of £2,790 per year.
Currently if your income in a year is less than this figure you can get into the 10% tax band (instead of the 20% tax band you’ve automatically been put in for your savings) by reclaim the overpaid tax from HMRC – not your bank or building society.
If you apply by April 5, that is a maximum of £271 for the 2012/13 tax year, £256 for 2011/12, £244 for 2010/11 and £244 for 2009/10. You can claim the £279 for 2013/2014 from April 6.
If you miss the April 5 deadline you will lose your maximum £244 for 2009/2010.
You need to fill in form R40, which you can print out from hmrc.gov.uk/forms/r40.pdf or phone HMRC on 0845 300 0627.
You will need your National Insurance number and details of your income and the tax paid, including the interest certificate from your bank or building society.
But remember, today’s news means the 10p tax rate for savers will be abolished from April 2015.
Pensioner Bond Announced
There will be a new bond paying market-leading rates for over-65s. Another great addition to the savings landscape for pensioners who are often dependent on making sure their savings provide a much-needed income.
For more information about savings be sure to check out the savings tag here at Magical Penny and keep those pennies growing!