Lifetime allowance to be cut to £1m says Osborne in pre-election budget

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Lifetime allowance to be cut to £1m says Osborne in pre-election budget

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Posted on: 18/03/2015

Chancellor of the Exchequer George Osborne has confirmed in Wednesday’s Budget  that the lifetime allowance will be cut from £1.25 million to £1 million.

Osborne, in his last Budget before this summer’s general election, added that the new lifetime allowance will be indexed, but he did not go on to explain by what.

Mr Osborne ruled out changes to the annual allowance.

This will be the third reduction in the lifetime allowance since 2012, when the government brought it down from £1.8 million to £1.5 million.

It was lowered again in 2013 from £1.5 million to the current £1.25 million rate.

  • While the lifetime allowance is being cut to £1 million it will be indexed so that it can rise from 2018.

Other Budget announcements on savings:

  • New personal savings allowance – first £1,000 interest on savings income to be tax-free
  • Annual savings limit for ISA increased to £15,240
  • “Fully flexible” ISA will allow savers to withdraw money and put it back later in the year without losing any of their tax-free allowance
  • New “Help to Buy” ISA for first-time buyers will allow government to top up by £50 every £200 saved for a deposit

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