Listening to the Chancellor’s speech there seemed to be very little for the opposition to take issue with – it appears Ed Milliband thought much the same. If ever an Opposition response effectively validated a Budget, this was it. The Opposition leader eschewed any attempt to criticise the measures announced, electing instead for a general “you are Tories and therefore evil” attack.
Either Ed Milliband had been completely wrong-footed by the speech and was unable to pull together a more relevant response, or he simply could not find anything that he particularly disagreed with.
And what did the Chancellor actually major on?
In terms of tax rates there were no major unexpected changes. There are changes to the personal allowance and higher rate tax threshold that will undo a small element of the fiscal drag that has created millions of additional 40% tax payers.
More interestingly, there is to be an extension to the flexibility of ISAs. There will no doubt be much “rejigging” now that cash and share ISAs can be merged and funds transferred either way. I was surprised to hear that 75% of those who hit the cash ISA investment limit each year are basic rate taxpayers and on that basis there was certainly an argument to increase the cash limit from £5,760, but increasing the maximum to £15,000 is very generous.
The best news though seems to be the proposed changes to pensions. At last we have a Government who accept that your pension belongs to you, even accepting that when you get to the stage of wanting to access that pension you may have enough intelligence to make informed decisions about how you access it. From April 2015 you will be able to access as much of your fund (in excess of the tax free cash) as you wish and that excess will be taxed at your marginal income tax rate, instead of the punitive 55% rate as at present. From 27 March this year there are also substantial increases in the flexibility of existing funds. And there is to be a consultation as to how free impartial advice related to the drawing of the funds can be offered to all those who need it. They are even going to look at the appropriateness of the 55% charge on death.
Now all of that IS good news – it seems even Ed agrees.
For more information on the Budget announcement please see our Budget Summary.