Farewell to a generally good 2014 for savers. What does 2015 have in store for us?
Did 2014 turn out to be a better than expected year for savers? According to a recent bulletin by Standard Life, the Autumn Statement by the Chancellor in early December rounded-off quite a year, with good news for ISAs and pensions.
ISAs and pensions had already had a radical makeover in the April 2014 Budget, with new ISAs becoming much more flexible from 1st July 2014. You can now use all your allowance for stocks and shares, cash or a combination of the two. In addition, from 6th April 2015, the ISA allowance goes up to £15,240.
The Autumn Statement proposed to change the ISA rules when a holder dies, extending the income tax and capital gains benefits for the lifetime of the surviving spouse or civil partner. The current Finance Bill will have the details, hopefully fully confirming that when an ISA holder dies, the value of their ISA savings is passed on as an additional ISA allowance, tax-free.
Also in the Autumn Statement, new rules for Pensions to be implemented from 6th April 2015 are a game changer when it comes to passing on your pension savings. For fixed income which is a ‘joint life annuity’ the announcement means that from 6th April 2015, ongoing income will now be paid tax-free to your spouse or civil partner, if you die before age 75. Standard Life suggests that we should be aware that the new rules look set to apply only when the first payment is made to a beneficiary on or after 6th April 2015.
Also revealed this year was the fact that, from 6th April 2015, the 55% death tax charge is being scrapped on pension savings passed on when someone dies before the age of 75. On death from age 75 onwards, the tax due depends on the income tax rate of the beneficiary which can, in some cases, be 45%.
The tax-free income band moves up to £10,600 for 2015/16, for anyone born on or after 6th April 1938, and £10,660 if you were born before that. There will now also be a new inheritance tax exemption for emergency service personnel who die, or who later die from injuries sustained in the line of duty from 6th April 2015. This mirrors the existing exemption for armed forces personnel.
All the recent proposed changes should become more clearly identified by the beginning of the 2015/16 tax year… just ahead of the General Election! But we should all be aware that our own personal tax position can affect any anticipated gains and that we still need to plan for our savings carefully: investments can come down as well as go up, as the saying rightly goes. Let’s hope, however, that 2015 continues the generally positive trend of the year just passed.