Spring Budget 2020

Chris Broome – Chartered Financial Planner

Rishi Sunak delivered his first Budget on 11 March 2020. Below you will find a summary of the proposed changes with links to the Budget documents if you would like more detail.
For our clients, please be reassured that all relevant tax changes will be factored into your 2020/21 Annual Forward Planning Reviews, with our accompanying advice provided.
Budget 2020

INCOME TAX

The personal allowance (the amount you earn before you have to start paying income tax) will remain at £12,500. For non-Scottish tax-payers, the amount people will have to earn before they pay tax at 40% will remain at £50,000.

For Scottish taxpayers the rates and bands are as announced by the Scottish Government.

PENSIONS

Call for evidence

The Government will shortly publish a call for evidence on pension tax relief administration.

Members of occupational pension schemes which use the net pay arrangement don’t benefit from tax relief on their pension contributions if they earn less than the personal allowance. They may benefit from a top-up to their pension contributions to bring them in line with those contributing to personal pensions through the relief at source method.

Annual allowance

The annual allowance remains at £40,000 for 2020/21.

Lifetime allowance

The lifetime allowance for pensions will increase from £1,055,000 to £1,073,100 for 2020/21.

Money purchase annual allowance

The money purchase annual allowance remains at £4,000 for 2020/21.

Tapered annual allowance

Threshold income is increasing from £110,000 to £200,000 and adjusted income from £150,000 to £240,000 for 2020/21.

The minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000. This means that all those with adjusted income of £312,000 or over will have an annual allowance of £4,000.

ISAs

The adult ISA annual subscription limit for 2020/21 will remain unchanged at £20,000.

The junior ISA annual subscription limit for 2020/21 will be uprated from £4,368 to £9,000.

The lifetime allowance ISA limit will remain unchanged at £4,000.

Note

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.