The Chancellor of the Exchequer has today announced a series of measures to help savers in the Budget. A new Personal Savings Allowance is to be created from April 2016, exempting the first £1,000 of savings income from any tax for basic rate taxpayers and the first £500 for higher rate taxpayers. This will provide potential savings for taxpayers of up to £200.
The Government has also announced major changes to ISAs. Savers will be able to withdraw and replace money from their cash ISA without it counting towards their annual allowance, and the range of ISA eligible investments has been significantly extended. A ‘Help to Buy’ ISA has been announced to assist first time buyers with getting onto the housing ladder.
In response to the announcements, David Davis MP said:
“Since the recession, savers have seen their capital and income eroded by the combination of rock-bottom interest rates and inflation, only to see what small returns they have been receiving further eroded by taxation. It is palpably unfair that those who did the right thing and saved for their future are punished to bail out the profligate.
It is absolutely right for this Government to address this injustice and grant some relief to those who rely on their savings. The new savings allowance will give a much needed boost to thousands, and the proposals designed to ease restrictions on ISAs will make them a far more effective tool to encourage people to save.
The Personal Savings Allowance will also simplify taxation of savings, and remove the tedious requirement for many people to account to HMRC for relatively small amounts of interest.
These measures are only possible because this Government made the difficult decisions and fixed our broken economy. In 2010 the deficit was more than 10%, the national debt was sky-rocketing and unemployment was on the rise. At the end of this Parliament, the economy is growing faster than any other major advanced economy, the budget deficit has been halved, our debt as a share of GDP is now decreasing, and employment is at an all-time high.
This is the case across the country – in my constituency of Haltemprice and Howden unemployment is down from 3.2% in 2012 to 1.5% now.
The Conservatives are proud of these achievements. We are succeeding in our plan to fix the economy, and Britain can once again have confidence for the future as we move from austerity to prosperity.”