Rishi Sunak delivered his first Budget on 11 March 2020. Below are what we believe to be the main points affecting financial planning:
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.
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.
The annual allowance remains at £40,000 for 2020/21.
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.
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.
We will issue a further Blog with details of the tax rates announced for next year (from April 6th)