Morfitt's Mailshot Issue 22...          Can't see this email properly? View in browser

Morfitt & Turnbull
 

Issue 22   

Budgets and Elections - a (recent) history lesson!
A week away from the General Election there is so much political rhetoric flying around we are keeping it purely on a financial footing and Adam will summarise the Budget changes in his section below but I thought it would be interesting to look back at some brief highlights of previous pre-Election Budgets dating from the 70's...
1973 – Anthony Barner (Conservative) - Introduction of VAT at a rate of 10%, which during a time of steep inflation proved unpopular even though the tax has remained! The following Election was won by a Labour minority.
1979 – Denis Healy (Labour) – The "caretaker Budget" raised taxes but as a General Election had been triggered following Labour's lost vote of confidence, the real changes came about following a Conservative victory in the Election...

1979 – Geoffrey Howe (Conservative) – Yes this is technically a "post-Election" Budget but it was ‘in waiting' and raised VAT to a single rate of 15% and basic rate Income Tax reduced from 33% to 30% with the top rate of tax reduced from 83% to 60%!

1987 – Nigel Lawson (Conservative) – A generous Budget which reduced basic rate Income Tax from 29% to 27%, a reduction in fuel duty of 5p per gallon, Capital Gains Tax annual exemption of £6,600 and small business tax rates cut to 27%. The Conservatives comfortably won the Election but these measures contributed to the inflationary boom that followed.
        
1992 – Norman Lamont (Conservative) – This followed the recession of 1990-91 this Budget introduced a lower rate of 20% Income Tax (the basic rate was 25%), increased the Inheritance Tax and Capital Gains Tax thresholds as well as cuts on betting and new car sales taxes. The Tories narrowly won the Election but interest rates soared to 15% briefly and the UK crashed out of the Exchange Rate Mechanism.

2010 – Alastair Darling (Labour) – The last pre-Election Budget before this year's was pretty neutral with stamp duty cut for first time buyers and spending curbed due to record deficits. The priorities outlined were to get borrowing down and secure economic recovery, however Labour were ousted by the Conservative/Lib Dem coalition.

See Adam's Technical for George Osborne's 2015 version!

Martyn
 

New ISA season!
The new limit for the 2015/16 is £15,240 (see below in Adam’s Technical and also comments from Gareth!) which can be invested into an Investment ISA or Cash ISA or a combination of the two.

Adam's Technical...  pre Election Budget special
 
Following on from the above article, Adam has summarised the latest from the current Chancellor, George Osborne...

The latest Budget was announced in March. Below I have highlighted some areas that may be of interest.
  
  The income tax-free personal allowance is £10,600 for the 2015/16 tax year and will increase to £10,800 in 2016/17. The amount at which people will potentially incur tax at 40% is now £42,385, increasing to £42,700 in 2016/17.
  A new tax-free personal allowance will be introduced in April 2016 for the first £1,000 of interest earned on savings. To receive this allowance taxable income has to be below the 40% rate. For individuals with income between the 40% and 45% rates a reduced allowance of £500 is available. Banks and building societies have advised that they will stop automatically deducting tax on savings interest from April 2016.
 
 
  The ISA limit for 2015/16 tax year has increased by £240 to £15,240. Speak to your usual M&T Adviser to take full advantage now!
  It is not currently possible to withdraw monies from an ISA then reinvest without the new monies being added to your allowance for the tax year. From this Autumn it will be possible to withdraw monies from a cash ISA then reinvest without it counting as additional used allowance. This has to be done in the same tax year and is only available with cash ISAs.
  An individual can now inherit their deceased spouse/civil partner's ISA following their death. This will effectively take the form of an additional ISA allowance and was introduced from April 2015 for deaths after 2 December 2014.
  A new type of cash ISA will be introduced this Autumn designed to help first time buyers save for their first home. The maximum amount that can be saved is £200 per month with an overall limit of £12,000 over 5 years. When the first home is purchased the Government will top-up the amount invested by 25%.
  The maximum pension fund value (known as the Lifetime Allowance) is now £1.25 million before tax has to be paid on the excess. In The Budget it was announced that this will be reduced again from April 2016 to £1 million.
  The government has launched a consultation to discuss ways in which a person receiving a regular income from a money purchase pension can convert this into a lump sum or transfer into another contract. This new flexibility is due to be introduced in April 2016.
  The government is hoping to transform the tax system over the next Parliament by introducing digital tax accounts, removing the need for annual tax returns. It is expected that approximately 50 million individuals and small businesses will be able to manage their tax affairs online.
          
 
If you have any queries on the above then please contact your usual Adviser. 

Gareth Says... 
Stock up on your ISAs!



     
An important new feature of ISAs to highlight...

"We have always been proponents of clients looking to use their ISA allowance whenever possible. This is because no further tax has to be paid on dividends or savings interest, any profit made on fund switches or sales is not potentially subject to Capital Gains Tax and no information regarding ISAs needs to be included on tax returns. Now there is one further reason to invest in an ISA.
 
 
 
As mentioned earlier, The Budget announced that from 6 April 2015 an additional ISA allowance is allocated upon death to a surviving spouse or civil partner. This means that if the ISAs are worth £50,000 at date of death then the surviving spouse or civil partner will have an extra allowance of £50,000 (not the value of the ISAs after Probate)."
  

 
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