Don’t lose out on 2017 allowances

The 2017-18 Tax year closes in just over a month, and it is important that you don’t loose out on any allowances. Here is a quick recap on what you are able to save:

  1. The Lifetime allowance on pension contributions is still set at £1m; however, from April 2018 it will be increased by £30,000 to £1,030,000. This is the first rise since 2010. The value of savings is tested when pension pots are accessed, on death, or at the age of 75. Tax penalties are incurred if pension savers exceed their lifetime allowance.
  2. ISAs are tax-free savings accounts for cash or stocks and shares investment savings. The total ISA allowance for 2017-18 is £20,000. The ISA can be a blend of a Help-to-buy ISA, an innovative finance ISA, cash or stocks and shares ISAs, or a the new Lifetime ISA. But the total amount saved must not exceed £20,000 in this tax year.
  3. More on Lifetime ISAs – launched in 2017 savers can invest up to £4,000 pa in a Lifetime ISA. The state will add a 25% bonus on top, which is paid until you reach 50 years of age. The maximum bonus is £32,000. To qualify savers would have to open an account on their 18th birthday and save £4,000 per annum.
  4. More on Help-to-Buy ISAs – designed to help first time buyers save for a deposit for a first home, these ISAs can be grouped by individuals to fund a house purchase. Individual savers can deposit £1,200 in the first month and then £200 per month thereafter. The state will top up 25% up to the value of £3,000 when the ISA is used to fund a house deposit. If the total Help-to-Buy ISA value exceeds £12,000 the state will still only top up a maximum of £3,000.
  5. We shouldn’t forget Junior ISAs which; replaced Child Trust Funds in 2011. Parent or Grandparents can save up to £4,128 per annum on behalf of a child. The savings can be a blend of cash and stocks and shares ISAs, however cash JISAs can be held with one provider only. Children are able to take control of JISAs aged 16 but cannot access the JISA until they are 18 years’ old.

What to expect in the Spring Budget 2018

The Treasury has moved to play down the Chancellor’s budget which; is to be delivered on 13 March. The purpose of the budget is to update the economic forecast for the UK, and the speech should take no longer than 15-20 minutes. Apparently there will be no red box, no official documents, no tax changes and no spending increases.

Relieved perhaps at this news will be landlords and landladies who have seen profit margins slimmed considerably with recent changes to property tax, and property finance tax breaks.  According to UK Finance there were 20% more buy-to-let mortgages in significant arrears in the last quarter of 2017, as compared to the last quarter of 2016. Coupled with this the biggest decline in homeownership is amongst 25-34 year old middle-income earners. The Institute of Fiscal Studies site the reason for homeownership shortage is that house prices have risen seven times faster than income growth for this group.

Good news for pensioners however, who come April 6, will have greater control over where and how they invest their pensions.

It is clear, with the fast changing UK economy, that individuals would be well-advised to consult a local Independent Financial Advisor about any financial concerns or queries that they have.

Please call our team of Chichester-based IFAs on 01243 532 635 to arrange a consultation.

To discuss pensions, retirement and investment plans with us please ask to speak to Richard Smith.

To discuss Life, serious illness, equity release (to provide for retirement income) and income protection insurances please ask to speak to Hamish Gairns.

To discuss mortgages and insurances please ask to speak to James Mayne.