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Changes to savings in the budget – how they could affect you

Mar 18, 2016


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Following George Osborne’s budget announcements this month we take a quick look at a few of the key changes that will be coming into force surrounding your savings – and how these might affect you.

New ISA Allowance:

Savers will be able to save tax-free to the sum of £20,000 from April 2017. At present, savers can put away £15,240 in ISAs but the new limit, coming into effect in April 2017, sees this drastically increase.

How does this affect me?

You will be able to save more money and receive tax free interest on the balance, allowing you to save more money over the term of the ISA.

New Lifetime ISA:

Younger savers will be able to receive up to £1,000 a year from the Government in a new Lifetime ISA revealed in the Budget. From April 2017, British residents, under the age of 40, will be able to access a special ISA that rewards them for saving for a home or a pension fund. George Osborne said: "For every £4,000 you save, the Government will give you £1,000 until the age of 50.”

The bonus comes with certain conditions - you can only claim it when you buy a home or when you reach retirement.

How does this affect me?

Although specifics are yet to be announced, if you are under 40 you should be able to sign up for the ISA. This means that  if you are 35 and you put in £4000 per year into your ISA you would receive £1000 a year from the Government until you turn 50 – making £25,000 in total towards your retirement or home purchase.

Help to Save Scheme:

A new scheme titled ‘Help to Save’ was announced in the Budget, offering cash incentives of up to £1,200 to people on benefits who regularly put money aside.

People who are in work and receiving tax credits or universal credit will be eligible for the scheme. They will be able to save up to £50 a month into the scheme, receiving a 50 per cent bonus after two years from the Government  (worth up to £600.)

How will this affect me?

If you meet the criteria for the ‘Help to Save’ and you put away the maximum amount every month then you could could build up a savings pot of £3,600 after four years, with £1,200 coming from the Government.