Budget 2016: Moneywise verdict

He said the government’s consultation had found no consensus on the pensions tax system. This is a gift to higher earners who can continue to receive upfront higher-rate income tax relief on their pension contributions.

Instead, he announced a new Lifetime Isa for the under 40s coming in 2017 with a government bonus attached to it. This may well encourage more people to save but it does add to the complexity of the Isa system.

We already have a Help to Buy Isa, cash Isa, stocks and shares Isa, and a new Innovative Finance Isa is launching on 6 April.  You can contribute to these within the new overall Isa limit of £20,000 from April 2017.

Rest assured that Moneywise will continue to help you decide how to save and invest within the limits. Long-term reform of the pensions system is still on the agenda  and there is a danger that the Lifetime Isa could be used in the future to replace the existing pensions system.


  • Drivers – no increase in fuel duty
  • Under 40s – new Lifetime Isa
  • Higher rate taxpayers saving for a pension who can continue to benefit from 40% tax relief on their contributions.



  • People being made redundant – employer national insurance to be levied in addition to income tax on payments over £30,000 (the first £30,000 remains tax free)
  • Insurance policy holders – an increase to insurance premium tax is likely to be passed to consumers
  • Public sector employers - have to pay more for their staff pensions.

Budget speech in 5 quotes:

“We will not burden our children and grandchildren. This is a Budget for the next generation.”

“From April next year, 600,000 small businesses will pay no business rates at all.”

“I am today providing extra funding so that by 2020 every primary and secondary school in England will be, or be in the process of becoming, an academy.”

“I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.”

“My pension reforms have always been about giving people more freedom and more choice. So faced with the truth that young people aren’t saving enough, I am today providing a different answer to the same problem.”

Tax allowances – some highlights:

  • Income tax allowance: £11,000 in 2016/17, £11,500 in 2017/18
  • Starting point for higher rate tax: £43,000 in 2016/17, £45,000 in 2017/18
  • Capital gains tax: Will fall to 10% for lower rate taxpayers, 20% for higher- and additional-rate taxpayers
  • NEW: £1,000 tax allowance for occasional earnings – e.g. craft sales
  • NEW: £1,000 tax allowance for income from property – e.g. renting out your garage


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