Martin Lewis on ISA allowance changes after Rishi Sunak delivers Budget 2020
Rishi Sunak delivered the Budget 2020 in the House of Commons today. The newly-appointed Chancellor, who has beeen in the senior role since February 2020, has presented the financial statement, which is the first Budget of Boris Johnson’s majority government, amid the coronavirus outbreak. Following the Budget, Martin Lewis shared his reaction on Twitter.
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Writing on Twitter this afternoon, Mr Lewis took a closer look at what has been announced in regards to ISA savings.
He wrote: “Starting to look through the detail it seems they may well be increasing the Junior ISA allowance (for under 18s) from £4,368 to £9,000 A massive hike, though actually as there are far fewer taxes on people’s savings these days not such an impact.”
Minutes later, the Money Saving Expert founder tweeted: “No announcements I’ve seen so far on changes to income tax or ISA thresholds.
“Will have to check the red book details – but unlikely to be substantial if not included #Budget2020.”
Following the Budget 2020, many people may be wondering how it could affect their personal finances, and some may wonder what it means for ISAs.
In the 2019 to 2020 tax year, the amount a person can save in an ISA is £20,000.
There are four types of ISA, and these are cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs.
It’s only possible to put money into one of each kind of ISA in each tax year.
When it comes to Lifetime ISAs, there is an additional limit as to how much a person can save in a Lifetime ISA each tax year.
Eligible savers can put in up to £4,000 each year, until they reach the age of 50. This £4,000 counts towards the annual limit of £20,000 for the 2019 to 2020 tax year.
For this type of ISA, the government adds a 25 percent bonus to a person’s savings, up to a maximum of £1,000 per year.
The tax year for 2019 to 2020 ends next month, with the new tax year beginning on April 6, 2020.
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Elsewhere in savings news today, the Bank of England has cut interest rates by 50 basis points, from 0.75 percent to 0.25 percent.
The Bank’s Monetary Policy Committee said: “Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months.
“Temporary, but significant, disruptions to supply chains and weaker activity could challenge cash flows and increase demand for short-term credit from households and for working capital from companies.
“Such issues are likely to be most acute for smaller businesses. This economic shock will affect both demand and supply in the economy.”
Following the announcement of the temporary measure, Sally Francis, money expert at MoneySuperMarket, commented on how savers and borrowers should respond to the interest rates cut.
She said: “The drop in the Bank of England base rate takes us back to the historic low level of 0.25 percent seen during the financial crisis. It is a drastic step and could have significant implications for anyone who is a borrower or a saver.
“If you have a variable rate mortgage, you may see your rate decrease. Mortgage rates are already low though this could mean they fall further – good news if you’re looking to switch to a fixed deal. If you’re on a fix already, check early exit penalties before switching – it may work out costlier even if the rate is cheaper.
“For savers, the news isn’t so welcome. Saving rates have been low for a long time and this cut could lead to further reductions in rates. People will need to compare rates and make sure their money is earning the best return possible in this low interest rate environment. Monitor your rate, compare other rates, and switch when your accounts aren’t paying the top rates available.”
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