THE 2014 BUDGET PENSIONS SHAKE UP AND NEW ISA RULES 19.03.14

At last something radical from a Chancellor that may even make tax rules and life for some people simpler.

ISA
Cash and stocks and shares ISA’s merged and new limit for tax year 2014/15 is £15,000.

PENSIONS
Dramatic unexpected changes here.

• No need to buy an annuity, even at age 75. An annuity gives you an income for life in exchange for a lump sum. In your pensions case your pension pot. You die and so does the annuity robbing your loved ones. With interest rates at a 320 year low that also means annuity rates are particularly low. So being forced to buy an annuity was really bad news. Now you do not have too. Common sense at last from a politician. Never thought I would see this in my lifetime!
• Trivial pension pots can be cashed in at the moment if only £18,000 that now goes to £30,000. This makes sense as availability of annuities below £30,000 was hard to come by and at even worse rates than other annuities.
• The capped drawdown rate has gone up from 120% GAD, Government Actuaries Rate to 150% so it is now easier to clear money out of your pension pot into say an ISA where it also grows tax free but at least income from an ISA is tax free whereas pension income is taxed at your highest marginal tax rate.
• Flexible draw down is now available for those with a minimum annuity, state or other pension income of £12,000 formerly £20.000. So more people can avoid the GAD rate restriction and clear out their pensions into ISA’s or offshore bonds to avoid tax on growth and get income when they need it tax free.