A new Lifetime ISA will be available from April 2017 for adults under the age of 40. Individuals will be able to contribute up to £4,000 per year and receive a 25% bonus from the government. Funds, including the government bonus, can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from age 60 completely tax-free.
Further details of the new account, which will be available from 2017, are as follows:
- Any savings an individual puts into the account before their 50th birthday will receive an added 25% bonus from the government.
- There is no maximum monthly contribution and up to £4,000 a year can be saved into a Lifetime ISA.
- The savings and bonus can be used towards a deposit on a first home worth up to £450,000 across the country.
- Accounts are limited to one per person rather than one per home, so two first time buyers can both receive a bonus when buying together.
- Where an individual already has a Help to Buy ISA they will be able to transfer those savings into the Lifetime ISA in 2017, or continue saving into both. However only the bonus from one account can be used to buy a house.
- Where the funds are withdrawn at any time before the account holder is aged 60 they will lose the government bonus (and any interest or growth on this) and will also have to pay a 5% charge. After the account holder’s 60th birthday they will be able to take all the savings tax-free.
The Chancellor said in his speech:
‘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.’
Internet link: GOV.UK lifetime-isa-explained
HMRC have introduced Advance Assurance for companies that claim Research and Development (R&D) tax relief.
If a company carries out R&D for itself or other companies, it could qualify for Advance Assurance. This means that for the first three accounting periods of claiming for R&D tax relief, HMRC will allow the claim without further enquiries.
Internet link: GOV.UK guidance
Those approaching retirement are being urged to be aware of a rise in pension scams, as criminals seek new ways to defraud pensioners.
Savers have been urged to be aware of a rise in pension scams, as criminals seek new ways to defraud pensioners. A report produced by Citizens Advice looked at 150 cases where pensioners had fallen victim to fraudsters. The report identified common types of scams which include:
- encouraging pensioners to move their savings into a ‘new’ pension
- fake investment opportunities and
- offering apparently ‘free advice’ and support which actually costs money.
In some cases pensioners are charged a fee for a service that isn’t required, while others are encouraged to part with personal information and bank details, either by email or phone.
Gillian Guy, Chief Executive of Citizens Advice said:
‘Scammers see pensioners as a prime target… ‘There are many people looking to benefit from the new pension rules, including scammers. Fraudsters can ruin people’s retirement plans by taking a portion or all of a victim’s pension pots.’
The Pensions Regulator (TPR) has recently launched a campaign to alert people to the danger posed by fraudsters.
From 6 April 2015 individuals have more flexibility as to how they use their pension pot, including the option to choose to take all their savings as a cash lump sum. TPR has warned that scammers are exploiting this change by enticing those about to retire with promises of ‘one-off investments’ or ‘pension loans’ or ‘upfront cash’, most of which are bogus.
Individuals who believe they are being targeted by a pension scam should contact the Pensions Advisory Service on 0300 123 1047. The Financial Conduct Authority’s website also has a list of known scams. Visit scamsmart.fca.org.uk.
Internet link: Citizens Advice publications Press release
The Office for National Statistics has issued the latest labour market data for the three months to February 2015 which show that unemployment fell by 76,000 to 1.84 million.
Neil Carberry, CBI Director for Employment and Skills said:
‘It’s great to see 248,000 more people in work, the fastest rise in employment in just under a year – thanks to our flexible jobs market.
With real wage growth rising people have a little more money in their pockets. But we need to see a recovery in productivity before wages can rise faster.’
Internet links: ONS statistics CBI news
With the political parties campaigning well underway in anticipation of the General Election on 7 May and Parliament having been prorogued there are few Government announcements to report this month. However by the time we issue next month’s eNews we will have a new Parliament.
For details of the relevant dates and formal procedures visit the following link.
Internet link: GOV.UK news