How The Government Can Help With Your New Year Plans For Your Finances

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October 23rd 2018
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How The Government Can Help With Your New Year Plans For Your Finances

The start of 2016 will have many seeking to stick to their resolutions - let's see what help is out there when it comes to money.

The Government recently published a list of measures available in 2016 to help people with the financial aspects of life - ranging from taxes and banking, through to housing and pensions. Some of these measures were introduced or revised over the last Budget and Autumn Statement.

So, here is a quick rundown:

  • Taxes

    From April 2016 the new basic personal allowance will be £11,000, which is a rise of £400 and equivalent to an £80 annual tax saving over 2015. If you are in a married couple and are both basic rate taxpayers, one may transfer up to £1,060 of their personal allowance to the other and gain a £212 tax saving on the 2015 tax bill too. In 2016 up to £1,100 can be transferred.

    In 2016 savers also get a £1,000 or £500 allowance for basic and higher rate taxpayers respectively. Banks will no longer deduct interest at source on savings so taxes are only deducted after the allowance is counted first.

  • Banking

    Switching to a more competitive bank account can save money but has been off putting in the past due to the complexity of updating existing direct debits etc. This however has been a free automated seven day process since 2013, available to individuals and SMEs and already used by for over two million transfers. It's guaranteed against any financial loss too. Since 2015 it has become easier to make personalised account comparisons too with the availability of a 'midata' file from your bank. This can be uploaded to make usage and cost comparisons online.

    The £15,240 annual ISA allowance for the 2015 tax year was updated to allow withdrawals without loss of tax benefits, as long as any money re-deposited is done so within the same tax year.

  • Housing

    Saving for making a first time home purchase can be more efficiently done now with the introduction of the Help to Buy ISA. Depositing up to £200 a month in this ISA will see the Government top it up with an additional 25%. The maximum top up given for any H2B ISA will be £3,000.

    The Help to Buy Equity Scheme will allow people with 5 percent deposits to purchase properties with mortgages requiring a 75% LTV. The Government will lend the extra 20 percent. In London the scheme will provide up to 40 percent of the loan.

    From April 2016, for people with household incomes less than £80,000 (or £90,000 in London) a revised shared equity scheme will allow purchase of between 25% and 75% of a property. That part is mortgaged or paid in cash. The remaining equity share is held by the Government for which a rent is paid - equivalent to up to 3% of the share.

    Mortgages will now get a simpler fee process with standardised naming and a clearer ability to cross-check competing products.

  • Pensions

    Since the start of the 2015 tax year changes to pensions have allowed access to money once over 55 years of age. Rather than using the money to purchase an annuity, as in the old scheme, people can now take the money and use it in any manner. The 25% tax free rule still applies too. For example, a £100,000 pension pot can be accessed once the holder reaches 55 years old. If all the money is withdrawn then £25,000 is tax free whilst the remaining £75,000 is taxed at the marginal rate of the taxpayer. If however the remaining £75,000 is used to buy an annuity then only the income from the annuity can be taxed.

So, those are the Government's measures for helping you stick to the financial aspects of any new year's resolutions.

Happy new year!

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