Budget 2014 - watch with us!

[SarahMumsnet]

So... George Osborne will be standing up to deliver this year's Budget at 12.30pm, with announcements expected on property tax, stamp duty and the personal tax allowance. Here's what you were hoping (and dreading) would come up; time to find out whether George has been reading

We'll be watching the Budget over here and posting about the key announcements for those who are at work unable to view the live stream; come join us, and tell us how you think he's doing ...

From next year you can take (at 55) not just 25% of your pension in cash but all of it, although three quarters will be taxed at your marginal tax rate (20% or 40% etc, not the current 50% penalty charge for so going).

It is very much a pensioner pleaser budget on the savings changes (and they vote and young people don't).

Overall cap on benefits cost.

I hadn't seen this one.... "Tax on homes owned through a company to be extended from residential properties worth more than £2m to those worth more than £500,000"

This is something to beware of - being happy high taxes are introduced - stamp duty or "mansion tax" (on London flats) at high levels you will never own at and then they bring it down to homes worth £500k and lower.

Jane, I think that's only properties owned by companies, not privately owned homes.

it used to be said there were more Old Etonians called Dave than women in the Cabinet.

the "company owned homes" is a dodge. No inheritance tax, because companies don't die, and no stamp duty, because instead of selling the house, you sell the company. Some are/were offshore companies where ultimate ownership is concealed.

efforts are slowly and tactfully being made to chip away at the dodges. As they are dodges by the rich, they are not treated as harshly as dodges by the poor.

I am the first to admit I'm not economically literate, but I wish I knew how much it cost to keep increasing the Junior ISA/CTF level, and what % of parents reach the threshold annually anyway. To me, at least, it seems like focussing resources on those who need them least.

some of the most expensive houses in London are owned by gangsters, oligarchs, and politicians with risky retirement plans, from a large foreign country not far from the Ukraine.

Has George straightened his hair?

I think the ISA merge and increase is a good thing - give people an incentive to save. I know most people might not hit the £15,000 but it's better to have a high limit than the ridiculously low one of just over £5000?

It has certainly not been worth saving money. It's been very unfair in the last 5 years that those who saved all their lives (usually older people) and who live on interest on their savings have been crucified when those who "spent spent spent" on massive loans on homes they could hardly afford have been protected due to low interest rate policies (which of course also help a Government which is paying interest itself at similar rates on billions of pounds of debt).

I would call it a budget for the old which does not help working families or middle earners much (because most people are middle earners and there is no spare cash for anything at present given the deficit).

My point on the houses held by companies would also apply to future taxes on property values for home owners which might start at £2m but soon come down to £500k. As for who holds a house in a company it is not always to evade tax or avoid it. It is sometimes because it is a family trust and they do not want young people getting their hands on cash when they are still young enough to be unwise. Some of these were set up in the 1920s and were not set up to get round tax. In fact the people using them lose the residential relief from capital gains tax as well I believe. Some companies own a house in London for staff at all income levels to stay in if there is company business over night as that is cheaper than constant hotels.

I agree Jane, I'm pretty sick and tired of hearing how the baby boomers had it so much easier than us etc and I'm in my mid 30's. So what if they had it easier, did the generation before them have it easier too?

If the budget is aimed at older people because they are the ones that vote, then guess what? The younger people need to start voting and making themselves be heard too.

a trust which was set up in the 1920's?

And how much Death Duties and Inheritance Tax has it paid over the last three generations?

Did I hear him say that the pension was excluded form the welfare cap? Aren't pensions the biggest chunk of welfare costs?

Well I've just checked and the NI allowance is still £7748
so all the hype about taking people "outside tax" is just that
because every penny that anybody earns over £150 a week will have 12% deducted from it

Oh no...... I just heard that drawing a pension at 55 has been changed to 57. When I set mine up I could draw it at 50. I already felt cheated when they retrospectively changed the rules from 50 to 55. I could have had my money by now but they keep altering things. They lie and cheat all the way and you take out one basis and they change the rules again and again. I am so glad I stopped paying into it but I had been so sure that at 55 I could take out the 25% lump sum and buy an annuity and yet again they put that forward to a later date... At this rate I will be 80 and they'll be changing the rules even then to stop me drawing it.

I didn't see this on the BBC, but Chronic Investor says (I shall have to think about this, because the deal on Pension contributions is that they are untaxed on the way in, but taxed on the way out. and it has always been said that the tax concessions are to prevent you being a burden on the state in your old age):

• From April 2015 anyone over the age of 55 will be able to take their entire pension pot as cash.

• Currently anyone with a defined contribution pension can choose to take a 25 per cent tax-free lump sum from their pot when they retire. If you take a larger lump sum, you have to pay 55 per cent tax on the excess, but this is being reduced to your marginal tax rate on the excess – 20 per cent for basic rate tax payers and 40 per cent for higher rate tax payers.

• From next week, the 27 March, the guaranteed income you require before you qualify for flexible drawdown, an arrangement where the additional income you take from your pension pot is unrestricted, falls from £20,000 to £12,000. The move is retrospective so anyone in drawdown can benefit

I saw the rise from age 55 to 57 on another forum and as I have been planning getting the 25% when I turn 55 which is not too long I was disappointed. I have been waiting for them to abolish the cash free lumop sum for years and bet they do before I read 55/57 or whatever it will be. However what you post above suggests that 55 remains so may be the other thread was just wrong.

So there will be a mass of retirements on the first day of each tax year so people can take maximum advantage of being taxed at their marginal rate?

there must be an election coming up.

You cynic PigletJohn!

The annuity/pension reforms are scary ime. Some reform was probably needed but this feels a bit like throwing the baby out with the bathwater!

THe annuity industry have been sticking two fingers up at the government since auto enrollment started under the last lot
this is (richly deserved) payback time

suits me to a tee as I never planned to use a pension scheme : the higher flexible ISA allowance is much more up my street

It might suit you but allowing everyone free access to their funds as cash isn't all that wise IMO. You're also oversimplifying the position with annuities - the market has flaws but there are also parts of it which are incredibly competitive right now.

Annuity rates have been falling for far more complex reasons than "sticking two fingers up to the government"

TiP I agree. Annuity rates have been awful for a long time, and this just cuts the rug right from under them.

We have always been very sceptical of pensions, because it has seemed that you can pay in, and pay in and then get bugger all back if the annuity market crashes just as you retire and are forced into buying one at a dreadful rate.

Jane - Some companies own a house in London for staff at all income levels to stay in if there is company business over night as that is cheaper than constant hotels.
Which they can still do, but they must pay tax on the purchase. And again, your point about passing property in trust to avoid a rash sale by a 20 year who suddenly inherits - still very possible to do, but taxes must be paid.
Let's face it, the only people passing whole properties in a trust are going to be the very wealthy.

Statistically - do you not think though that the annuity market is vastly unfair? These companies have known that people must buy a product, and so the opportunity for profiteering and cartel-style fixing of rates etc is huge.
The average pensioner navigating that market with little or no knowledge hasn't a hope in hell of knowing whether they come away with a good deal.

I don't buy the idea that you can't trust people with their own money. You will always get fools ready to be parted from their cash - no reason why the rest of us should be so restricted in our choices.

Cartel style fixing - to the best of my knowledge (which is fairly extensive) this isn't going on to any great degree. I'm sure there are isolated incidents but no, there's not wide spread cartel style fixing. I also know for a fact that at least some parts of the market really aren't experiencing vast profiteering.

I think there should have been some better options - more encouragement of drawdown type products which already exist and are probably more suitable for some people - but I think at a bare minimum there should be some sort of requirement to get financial advice before you can take your entire pension in cash. You're right that many people don't understand annuities although it's not that hard to shop around, but lots of people also don't have much ability to plan long term for the future. Especially with auto enrolment now, lots of people will have cash in a DC scheme because it's just been taken without any thought.

I think we could potentially be storing up even more of a pensions crisis for the future by doing this - longevity is increasing after all.

the life offices have well-established form for giving their own customers rates that are worse than open market rates. They also charge their long-standing policyholders higher than market prices for their annual service charges.

This is a very common form of loyalty penalty, when you overcharge your regular customers because you know most of them are too thick or too lazy or too trusting to find a better bargain.

You have probably found the same with home and car insurance renewals, or with gas and electricity prices.