A financial planning guide to the budget

March 21st, 2013 by

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Dan Woodruff

Dan Woodruff

Certified Financial Planner at Woodruff Financial Planning
Financial Planning helps you to navigate and anticipate significant life changes. I want to help you to ensure your money is managed wisely to give you the financial security that will fund the future and lifestyle that is important to you.
Dan Woodruff

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Budget reviewHere are the main points taken from yesterday’s Budget from a financial planning perspective.

Income tax

From April 2013 the personal allowance will rise to £9,440. From April 2014 this will rise to £10,000.

Corporation tax

Businesses will pay less corporation tax – a reduction to 20% from 2015.

Business National Insurance

From 2014 all businesses will get the first £2,000 of employer national insurance back. This means a boost for small businesses taking on their first members of staff.

Boost for investment funds

The budget will abolish schedule 19 stamp duty reserve tax on funds as well as shares traded in the AIM market. This is paid by UK investment funds on investment sales, and forms part of the costs of investment funds. This should increase returns for investors from April 2014.

The capital gains tax annual allowance rises to £10,900 from April.

Consultation on residential property in SIPPs

This is a minor measure which could allow SIPPs to convert unused commercial property space to residential use. This is not permitted at present without a tax penalty.

Consultation on transfer of child trust funds

The now defunct child trust funds are locked into old products, with potentially high charges. The Government will consult on allowing these accounts to be transferred to Junior ISAs.

Review of drawdown rates

The Government will review the way drawdown income rates are set, with the idea of bringing them into line with the way annuity rates are set.

Changes to maximum pension contributions

The annual allowance for pension contributions will reduce to £40,000 from April 2014. The maximum allowed in pensions will reduce to £1.25 million.

Photo credit: Flickr: Altogetherfool

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