Sharma welcomes Budget for savers, families and exporters

Alok Sharma, the Member of Parliament for Reading West, has welcomed the Budget delivered today by the Chancellor, which will cut taxes for millions of working people, provide help for savers and included measures to boost business investment and Britain’s exports.

Alok Sharma said: “I have long championed an increase in exporting from firms in the Thames Valley and so I am absolutely delighted with the support outlined in the Budget to help firms export and encourage business investment. On a local level, I will be doing all I can to inform Reading based companies about these new measures, particularly in respect to finance.”

Alok continued: “Hard-working families in my constituency will welcome the news that the personal allowance will rise to £10,500 next year, benefiting 43,540 people in my Reading West constituency and taking an extra 415 out of tax altogether, giving them more financial security for the future. I regularly make the point that the aim should be to increase the personal allowance so that no one working on minimum wage should have to pay income tax and I hope this will be an aspiration in the Conservative manifesto next year.”

Alok concluded: “Savers have had a hard time in recent years with low interest rates, so the announcement that the annual limit for ISAs will increase dramatically to £15,000 will come as particularly welcome news. The message from this Budget was clear, if you make the responsible choice to save for your family, save for a home or save for your retirement, the Government is on your side.”

Some of the measures announced during the Budget Statement include:

HELP FOR SAVERS – support for savers is at the centre of this Budget.

·         Make ISAs simpler by merging the cash and stocks ISAs into a single New ISA. The annual limit will increase to £15,000 a year – for either shares, or cash, or a combination of both.

·         Abolish the 10p rate on savings income. The 10p starting rate on savings income will become a zero-pence rate. The zero-pence band will expand up to £5,000 of savings income. 1.5 million low income savers will benefit.

·         A new pensioner bond in January 2015. It will offer a better return than any equivalent in the market today. The rate will be set in the Autumn for the best possible offer – but the central assumption now is 2.8% on a one year bond and 4% on a three year bond. The amount people can invest in Premium Bonds will also rise, first to £40,000 on 1 June this year then to £50,000 in 2015/16. And there will now be 2 £1 million prizes every month.

CUTTING TAXES – letting hardworking people keep more of the money they earn.

·         Personal Allowance will rise to £10,500 in 2015/16. A tax cut for 25.4 million people. By April 2015, a typical basic rate taxpayer will pay £800 less income tax a year. We will have lifted 3.2 million out of income tax. The budget measures do not result in any additional higher rate taxpayers. The full benefit will be passed on to higher rate taxpayers – all earning up to £100,000 will gain equally and will pay less tax because of this tax cut. It is a tax cut for low and middle income earners.

·         Bingo tax halved from 20 per cent to 10 per cent. This will protect jobs and protect communities.

·         Penny off the pint. Beer duty will be cut next week by 1p. The escalator for all alcohol duties has been scrapped. Duties on ordinary cider, whisky and other spirits have been frozen.

BACKING BUSINESS – EXPORTS AND INVESTMENT,

·         Doubling the Annual Investment Allowance to £500,000. This will run until the end of 2015.

·         The most competitive export finance in Europe. We will double the amount of lending available to £3 billion and from today the typical interest rates we charge on that lending will be cut by a third.

·         Reform of APD. From April 2015, the two highest rates (C & D) will be abolished. Long haul flights will be in the same lower band B rate as flights to the US. There’ll be start-up support for new routes from regional airports.

·         Raising the rate of R&D tax credit for loss-making SMEs to 14.5%. The business rates discounts and enhanced capital allowances for Enterprise Zones will also be extended for three years, and the Seed Enterprise Investment Scheme will become permanent.

PENSION FLEXIBILITY – fundamental reform of the taxation of defined contribution pensions

From April 2015 we will legislate to remove all remaining tax restrictions on how to access DC pension pots:

·         No one will have to buy an annuity if they don’t want to. Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal.

·         There will be no punitive 55% tax rate if you try and take more than your tax-free lump sum. It will still be possible to take 25% of a pension pot tax-free on retirement. But what you take above the tax-free lump sum will be taxed at normal marginal tax rates – not 55% as at the moment. 

·         A new guarantee, enforced in law, that everyone who retires on DC schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have. We will spend £20 million over the next two years to work with consumer groups and industry to develop this new right to advice. 

In the meantime, from 27 March, we will:

·         cut the minimum income requirement for flexible drawdown from £20,000 to £12,000;

·         raise the capped drawdown limit from 120% to 150%;

·         increase the size of a single pension pot that can be taken as a lump sum five-fold to £10,000, and increase the number of pots under £10,000 that can be taken as a lump sum from two to three; and

·         almost double the size of total pension savings that can be taken as a lump sum to £30,000.