The Budget presented to the House of Commons last week by George Osborne, contained much to interest savers, pensioners and local businesses in particular. I know from speaking to a large number of retired residents over the last few months, that there has been considerable concern about the low levels of return they have been getting from the savings they have built up over the course of their working life. The budget contained a substantial amount of information about new products that will soon be launched to improve this situation.
New pensioner savings bonds will be available for savers at the start of next year, which will offer some of the best returns available anywhere. A one year bond will typically pay interest at around 2.8% a year and a three year bond will pay around 4%. In addition to this, there will be no tax to pay on the first £5,000 a year of income from savings. The Chancellor also announced the creation of a new ISA, which will allow savers to put aside up to £15,000 a year tax free and no distinction will be given to whether these savings take the form of cash or other investments like shares, for example.
The biggest changes announced in the budget were to people’s private pensions. I believe that when people have worked all their lives to put something aside for their retirement, that they should have more power to decide how that money is spent. George Osborne announced that the requirement to convert pension savings into an annuity will be scrapped, and also the punitive 55% tax rate that had to be paid on savings drawn down from a pension, over and above the tax free lump sum, will also be abolished. In the future, any additional income drawn down from a pension will be taxed at the normal marginal rates.
I know from my work over the last two years with the Folkestone ‘Town Team’, that smaller businesses in the high streets will welcome additional support from the government. I was pleased that the Chancellor was able to confirm that they will receive a £1,000 discount on their business rates, and they will also benefit on 1st April from a £2,000 reduction in the employment allowance, paid by as part of their employer national insurance contributions.
Most people in work will also benefit from the changes to income tax announced in the Budget. People will not now pay income tax on the first £10,500 they earn. This will mean that over 45,000 residents in the Folkestone and Hythe constituency will be paying less in income tax.
One measure in the budget that will also be particularly welcomed is the VAT relief for the fuel for the Kent Air Ambulance. I have supported this campaign from the air ambulances around the country, and this reform will allow these charities to spend more of the money they raise on the life saving services they provide to local residents.