October 2018 Budget

Bymapfinancesadmin

October 2018 Budget

I know that when it comes to Budget time, I sit very close to the radio and try to gather as much information on changes as I can. The last one on Monday 29th October 2018 was no different.

What you should not do however is merely listen to it to see how it affects you today, and nothing else. You need to sit back after the event and decide what planning you need to do as a result.

What I will be looking at for clients is:

  • Where clients are withdrawing money from their pension and merely using up their allowances, then from April 2019, the basic allowance we all get changes from £11,850 to £12,500. This is a change from £987.50 per month to £1,041.67 per month, so why not take advantage of this. After all, it’s tax-free money.
  • The other big change in income tax is that the basic rate band which started at £46,350 is now pushed up to £50,000, and for those liable, this is a saving of £730 per year. So, before this change you would get £3,862.50 per month taxed at 20% before you were moved onto 40%, and now this is changing to £4,166.67 a month. That allows you another £304.17 taxed at 20% that previously was taxed at 40%.
  • National Insurance thresholds, which wasn’t really covered in the budget, will also rise as well.

We need to remember these rates will apply to the bulk of the UK but not to those who live in Scotland, as the Scottish Government have still to declare how much they intend to deviate from the UK Government. Once we have the rates from the Scottish Government, then we all need to sit down and see how much more we can get out of the system without tax, or before we get to 40%. Thereafter, it’s time to sit back and see what tweaks you can make to your own situation, to squeeze the maximum benefit out of the system.

One thing mentioned in the Budget was that pension cold calling will be made illegal from this Autumn, so if you are contacted by anyone asking you to move your pension, take down their details and we can inform the regulator about this, as this should not be happening.

Finally, the annual ISA allowance is staying at £20,000 per year, so no change. If you can afford a wee bit more into your ISA, as long as you don’t go over the £20,000 limit, this is worthwhile doing. Maybe even divert some of the tax savings above?

If you would like any advice or assistance in planning out how the budget has affected you, for good or for wose, contact Money Advice & Planning Ltd today on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

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