Autumn Statement 2014: Isa reforms bring welcome tax relief for savers
Britain’s thrifty received a welcome boost yesterday after new a number of reforms were applied to the country’s Individual Savings Accounts (ISA) and pensions policies.
In the Autumn statement, George Osborne announced that from 2015 the ISA allowance will rise to £15,240, and the changes to the starting rate of savings tax will mean that those earning under £15,600 need pay no tax on any of their savings income.
Additionally, up till now married ISA savers have seen their ISA tax advantages disappear after their death, even if they were saving as a couple. The government has now changed that policy, allowing for a spouse or civil partner to inherit their partners ISA tax advantages after their death.
The coalition has also abolished the infamous “death charge”. From April next year, individuals will be allowed to pass on their defined contribution pensions savings to any nominated beneficiary when they die, instead of paying the current 55 per cent charge.
And finally, from April 2015, beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity will be able to receive any future payments from those policies tax free. And the tax rules with also be changed to allow joint life annuities to be passed on to any beneficiary.
Stephen Herring, head of taxation at the Institute of Directors, said: “The abolition of the 55 per cent death charge on pensions has been widely trailed already but is none the less welcome, as is the better treatment of joint life annuity holders. Both measures will encourage financial resilience in the UK.”