There a variety of winners from today’s budget (beer-drinking, car-driving Army Cadets who love a trip to the bingo and are planning a career in graphene research chief among them), but there’s particularly good news for savers.
As we have covered in our Homes, Jobs and Savings campaign, successive governments have treated savers as a cash cow – punishing those who do the right thing for themselves, their family and the country, and deterring millions of others from putting money aside for retirement or a rainy day. It’s economically and socially wise, as well as deeply conservative, to break that trend.
Happily, George Osborne appears to agree. Here’s a run-down of the measures he put forward today:
- More freedom to use your pension as you wish – including a welcome end to the compulsory annuity.
- Better access to professional advice to navigate the pension market (something I urged in September).
- An increase in the amount people are allowed to invest in premium bonds from £30,000 to £40,000, and an accompanying increase in prizes.
- Two new NS&I savings bonds will be launched, available to those aged 65 and over to secure new sources of income.
- The 10 per cent starting rate of tax on savings income will be abolished and replaced by a 0 per cent rate, another measure I proposed in September as part of our campaign – a stark contrast with Gordon Brown’s tax-raising “abolition” of the 10p income tax rate, and a step which should help bank capitalisation as well as savers’ income.
- Most notably, there is a big boost for saving in ISAs – the two types will be merged to allow people to save in stocks, shares and cash as they wish, everyone’s tax-free ISA saving allowance will increase to £15,000 and the Junior ISA allowance will rise, too. Given that many people use ISAs to save up a deposit to buy a house, parents often use the Junior ISA to save for their child’s future, and millions of others use ISAs as a long-term safe haven from tax on pensions, this is good news for every age group.
All in all, savers should benefit across the board. As I wrote early in our Homes, Jobs and Savings campaign, that will help the whole nation:
“Savings are good for us. Someone with savings has protection against unforeseen calamities and provision for their retirement. A society with savings has a collective buffer against economic downturns, a more stable banking sector and fewer people reliant on the taxpayer when they grow old.”