Commenting on the savings changes announced in today’s Budget, Malcolm McLean, senior consultant, says:
“The Chancellor announced at the start of his Budget presentation that this would be a Budget for savers.
“In addition to the radical pensions changes proposed, there is more good news for pensioners who rely on their savings to supplement their income, as they will now be given an opportunity to use their full ISA allowance for cash saving if they so wish.
“The Chancellor announced that the allowance for the annual investment limit for this new type of ISA will be increased to £15,000 - almost trebling the current limit of £5,760 a year for saving in cash ISAs. This will benefit the more than 5 million people who currently reach their ISA limit each year, three quarters of who are basic rate tax payers.
"The abolition of the 10% tax rate on savings income up to £2,790 and its replacement by a nil rate on £5,000 is expected to benefit one and a half million people, with an average gain of over a £150 per week. This means that anyone with total income of less than £15,500 per annum will no longer pay any tax on their savings income. This will simplify the tax system for more than one million savers who will no longer be liable for any tax on their savings.
“With the current low interest rates which have been with us for some time now, many pensioners have felt aggrieved at having to pay tax on their savings income and will therefore welcome with open arms these two very significant surprise changes.”