New year means new op­tions for those with sav­ings

Buckinghamshire Advertiser - - COMMUNITY -

AS the year turns, it is in­evitably a time when peo­ple think about their fi­nances. There will be a re­view of ex­pen­di­ture over the Christ­mas pe­riod. This might be com­bined in some house­holds with the need to com­plete and file the self as­sess­ment forms for HM Rev­enue and Cus­toms, pay­ing in­come tax by the end of Jan­uary.

In the UK, we have had a long pe­riod of low in­ter­est rates, which I know from con­stituents is re­ally help­ful for fam­i­lies with mort­gages. It helps busi­nesses us­ing loans to ex­pand their en­ter­prises, too.

The group, how­ever, which has not ben­e­fited so much is the peo­ple with sav­ings. At his Bud­get in March 2014, the Chan­cel­lor of the Ex­che­quer said he would take ac­tion to help the over 65s. Th­ese are usu­ally (but not al­ways) pen­sion­ers, who use the in­ter­est earned from sav­ings to sup­ple­ment their in­come from a pen­sion.

The pro­posal last March was for a ‘pen­sioner bond’ and the de­tails were re­leased in De­cem­ber, with the bonds be­ing launched in Jan­uary 2015.

Peo­ple who are aged 65 or over can invest in the bonds, which will pay higher in­ter­est rates. Th­ese are 2.8 per cent for a one year bond and four per cent for a three year bond. In­di­vid­u­als can invest £10,000 in each type of bond, thus in­vest­ing up to £20,000 at th­ese higher rates.

Tax will be payable on the in­ter­est (in­clud­ing higher rate tax for in­di­vid­u­als in that in­come bracket), but peo­ple who do not pay any tax will be able to re­claim the tax paid. This will give peo­ple with sav­ings more op­tions, as the amount which they can save us­ing ISAs (in­di­vid­ual sav­ings ac­counts) has also been in­creased.

I have been very aware that con­stituents who rely on in­come from their sav­ings have felt that they were shoul­der­ing their own bur­den dur­ing the ef­forts to re­duce debt and help the UK econ­omy to grow, so I hope some over 65s will be able to take up this new op­tion for sav­ing.

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