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Your Pre-Budget Questions and Answers 
Q: Can I continue to save in an ISA?A: Yes. Individual Savings Accounts (ISAs) will continue indefinitely. Their future was uncertain after Mr Brown repeatedly refused to commit to ISAs as a long-term savings scheme. But in his 10th Pre-Budget report he pledged that they would become a permanent fixture of the savings market. However, savers hoping for a rise in the current savings threshold of £7,000 were left disappointed. The Chancellor also scrapped the distinction between cash Mini-ISAs and stocks and shares ISAs. Up until now, savers who opened a cash mini-ISA (which had a limit of £3,000) could only invest an additional £4,000 in an equity ISA, they will now be able to spread their money as they wish as long as they don't exceed the £7,000 limit. The Chancellor gave no date for the reforms and implementation is subject to consultation. Q: Will I get more child tax credit this year? A: Yes. Mr Brown confirmed that the child element of the tax credits will rise in line with earnings this year, giving families who qualify for the payment £1,845 a year, up by £80. Mothers-to-be will also receive child benefit payments from before their baby is born. From 2009, expectant mothers can receive this payment from the 29th week of pregnancy. Q: What about my pension? A: Savers hoping to avoid taking an annuity by opting instead for an Alternatively Secured Pension (ASP) will be disappointed. The Pre-Budget report says: "It was never the intention that ASPs would become a mechanism to avoid compulsory annuitisation, or to leave a tax-favoured lump sum that could then be passed on." So those in ASPs will be forced to take an income each year - limiting the amount left to pass on to any heirs. In addition, it will be nearly impossible to pass on any lump sum left on death without attracting penalty charges. Q: What about my investments? A: Investors keen to put their money in a Real Estate Investment Trusts (UK-REITs), the investment scheme which started this January, will have more choice about where to invest their money. The Chancellor said the Finance Bill 2007 will include a change to the regime which will make it easier for newly established companies to join the scheme. They will no longer have to meet the requirement that at least 75 per cent of their business by assets and income consists of property rental activity within one year of entry. Q: Will I have to pay more to travel? A: Booking a flight is set to become more expensive. After halving air passenger duty in 2000, Mr Brown announced that it would double. The charge is to rise from £5 to £10 from February 1, 2007 for economy flights. Business class customers will see the charge rise from £10 to £20, while long-haul economy travellers will pay £40, up from £20. Those buying first-class long-haul flight tickets will pay £80, up from £40. Train operators who participate in a pilot scheme will benefit from a reduced tax on environmentally friendly fuel, but whether this saving is passed onto commuters is uncertain. Q: What else did the Chancellor say that might affect me? A: The Chancellor got tough with tax avoidance. He has introduced legislation which clamps down on schemes used by companies and individuals to reduce their tax bills. He said he would stamp out stamp duty land tax avoidance, including schemes such as using partnerships, sub-sales and lease. He also disappointed individuals hoping to take advantage of sophisticated schemes which create a loss in their personal accounts to cut their CGT liabilities by introducing measures to prevent such schemes. If you require any further information about the services that we provide or would like to review your financial planning position, please contact us |