Now the whirlwind news cycle and machine gun rattle of stories on the key details of yesterday’s (18 March) Budget is beginning to give way to measured response, FTAdviser takes a look at the headline themes that came out of George Osborne’s last fiscal package before the election.
1. Brace of new Isas.
Osborne hailed a quartet of measures to continue the self-proclaimed “savings revolution” that started with the measures to boost Isas and liberate pensions this time last year. Chief among them was a couple of new Isa products: a “fully flexible Isa” and a “Help to Buy Isa”.
The Help to Buy Isa will give first time buyers that save up to £200 a month towards their first home an uplift of £50 within the tax-relieved environment. A total of £3,000 can be claimed from the government, which would boost £12,000 of tax-sheltered savings into a £15,000 deposit.
Estate agents immediately reacted that the account may still miss the mark, as rising property prices mean there are still a lack of affordable homes for those trying to get on the ladder.
The Flexible Isa gives savers freedom to take money out and put it back in later in the year, without losing any of their tax-free entitlement. A new range of investments will also be allowed to be housed in the account, including listed bonds issued by co-ops.
Some may raise questions over a product to encourage saving that has the effect of giving freedom to spend more freely, but it is conceptually in line with the ‘trust’ argument for opening access to tax-relieved savings offered under pension freedoms.
2. Savings tax (mostly) abolished.
Another other major thrust of the savings revolution - and the final flourish to the speech - was the effective abolition on the tax on savings for the vast majority of savers.
In practice this is a new personal savings allowance which lifts the first £1,000 of income from a non-Isa account out of the marginal rate taxes that currently apply. Higher rate taxpayers will benefit from a lower rate of £500.
Mr Osborne said that this will mean 17m people will see the tax on their savings not just cut, but abolished. “At a stroke we create tax free banking for almost the entire population.”
3. Annuity for cash plans face obstacles.
Finally among these headline announcements, Mr Osborne confirmed an already-announced consultation on the re-selling of existing annuity contracts, while the document itself was published on the Treasury website alongside the Budget papers.
Consumer took the news as a green light to call their providers and advisers to find out about their ability to cash in and access next month’s freedoms. Someone on a BBC News phone-in last night even asked when they would be able to get their hands on the cash.
Delving into the actual consultation paper revealed the government is well aware that safeguards will be required to stop annuitants losing out - most likely in the form of independent financial advice - while some suggest the problem of calculating value could halt the plans in their tracks.