An ‘at a glance guide’ to the Budget from a top financial planner

19th March 2014 by Lee Robertson

We have all become rather used to Budgets long on rhetoric and short on action but this trend does seem to have been reversed this time by the Chancellor.  A whole raft of measures look set to impact on the adviser, the insurer, the fund managers and the investing public.  It may just be the first radical budget I can recall in quite some time and it appears we have had a Treasury finally listening to many of the concerns of the hard pushed investor.  Those at retirement also appear to have had a huge injection of flexibility into their options.


The income tax threshold will be increased to £10,500 next year.  It appears likely that there will be a 2% stamp duty bank on homes at £250,000.  More detail on tax will come next week.


The annual ISA allowance is to be raised from £11,250 to £15000

The Seed EIS is to be made permanent

VCTs face a crackdown, particularly those with enhanced buybacks and those in renewables.  This may make it difficult for new VCTs to start paying dividends early.

The Government has set the rate of income tax relief for the Social investment tax relief at 30%. That is the same as the rate for Enterprise Investment Scheme and Venture Capital Trust investments and creates a level playing field for investment.  Individuals making an eligible investment at any time from 6 April 2014 can deduct 30% of the value of that investment from their tax liability for the year in which the investment is made.

Unlike the other venture capital tax reliefs, SITR will be available for debt as well as equity investments, and for organisations with fewer than 500 employees. That will make it easier for social enterprises to access the relief and reflects the particular characteristics of the sector. These terms are unique to SITR.

The Government have also announced today the maximum amount of tax-advantaged investment each organisation can receive. Eligible organisations will be able to receive up to €344,827 (around £290,000) over three years. The amount is expressed in Euros in order to maximise the amount organisations can receive without infringing EU rules for de minimis schemes, and is nearly double the limit proposed in the consultation paper last summer. The sterling equivalent to the maximum amount in Euros will be set by the spot exchange rate on the date of investment.

Pensions and retirement

Money is to be made available for those at retirement to take unbiased advice to help with their many options.

From April 2015 anyone over the age of 55 will be able to take their entire pension fund as cash.  25% of the fund will remain able to be taken as tax free with the remaining 75% taxed at the saver’s marginal rate.  This is really quite unprecedented and will cut right through much of the obfuscation currently seen by life assurers and annuity providers.  The government will however move to block public sector pension (most of which are largely unfunded) transfers to prevent a mass exit.

The overall trivial commutation limit (for very small funds) will be increased from £18000 to £30000.

The flexible drawdown minimum income requirement will also be reduced from £20000 to £12000.  The maximum income a person  can take in retirement will rise from 120% of the GAD rate to 150%.

It is not all good news however as the minimum age people can access their entire fund will rise to 57 from 2028.

There will be new NS&I bonds launched for retirees.


The government will extend the Support for Mortgage Interest Scheme for another year.  The Treasury says the scheme, from which borrowers can get help towards their interest payments from the Government, helps over 200,000 people a year stay in their homes.

In summary, whilst this is a very quick look I have tried to concentrate on the key issues for investors and those approaching retirement.  The massive changes to how pensions may be taken is sure to be welcomed as many have felt that the annuity system was no longer working, particularly with low interest rates.  Similarly the increase in ISA allowance will be welcomed as may are now using them as their main tax free savings vehicle for their accessibility and flexibility.

For once, I find myself largely applauding a Chancellor on Budget day.

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