Ten major changes to your finances in 2015
Written on 22 December 2015
1. Personal pensions
In April the new pension freedoms were ushered in. The new rules affect people who have built up their own pension pots by contributing to a defined contribution scheme such as a personal pension. Defined benefit schemes such as final salary pensions are not affected.
In the past people had to use these savings to provide themselves with an income in retirement. But now once you’ve reached 55 you can do what you like with this money. You can take some or all of it as cash or leave it for later when you stop work and then take lump sums or use the whole lot to provide yourself with an income in retirement. Not all pension providers offer all the options so if yours doesn’t offer the option you want you may need to move your pension pot to another provider.
To help people decide what to do the Government has set up Pension Wise which provides people with a 45 minute guidance session to discuss their pension pot options. You can find out more about this and the new rules in our guide on ways to use your pension pot.
2. State Pension
A new flat rate State Pension will be introduced for people who reach their State Pension age from 6 April 2016 onwards. Anyone who reaches their State Pension age before this date will not be affected.
People who have already reached State Pension age or who will do so before 6 April 2016 can now buy additional State Pension. Since October it's been possible to make a one-off payment (a voluntary lump sum Class 3A contribution) and buy between £1 and £25 a week of extra pension. The cost of each additional £1 of pension depends on your age.
To find out how much it costs to buy this extra State Pension use the government’s top-up calculator and read our feature on the new top-up options. Our guide on your State Pension also contains more information.
3. New state benefits regime
Following his party’s victory at the polls, George Osborne announced a raft of changes to the state benefits system. As well as freezing working-age benefits for four years, the Chancellor of the Exchequer introduced restrictions on child tax credits from April 2017, cut the income threshold on the amount you can earn before you start to lose tax credits and Universal Credit, and lowered the Benefits Cap (that’s the maximum amount of benefits you can get if you are of working age) to £20,000 (£23,000 in London).
The Chancellor also planned £4.4bn of cuts to tax credits in April 2016. But in a dramatic U-turn this move was scrapped in his Autumn Statement in response to public concern about the effects of the changes on low-income households. Mr Osborne pointed out that tax credits are being phased out anyway as Universal Credit is being introduced.
4. Inheritance Tax
In response to soaring house prices in the UK, the Government announced plans to increase the Inheritance Tax (IHT) threshold for those passing on a family home to their children or grandchildren when they die. From April 2017, an additional 'family home allowance' of £175,000 will be phased in, taking the overall limit to £500,000 or up to £1 million for married couples and civil partners from 2020/21.
You can find out more about this in our round-up of the Summer Budget.
5. Premium Bonds
On 1 August the Post Office stopped selling Premium Bonds - 59 years after it sold its first Bond over the counter. Customers wanting to buy Bonds now have to apply to National Savings & Investments (NS&I) direct either by post, phone (0500 007 007) or online.
The amount of Premium Bonds you can hold also rose in June to £50,000.
6. New Consumer Ombudsman Service
A new Consumer Ombudsman service was launched in August to help people resolve any complaints they have with goods or services they’ve bought that are not already covered by an ombudsman. The service looks at all complaints about retailers, home maintenance, improvement or installation services, second-hand cars, car repairs and car servicing.
You can contact the Consumer Ombudsman complaint service at www.consumer-ombudsman.org.
7. Sale of Lloyds Bank shares
The Government announced in October that it is to reduce its 12% stake in Lloyds Bank by selling at least £2bn worth of Lloyds shares to the public next spring.
Investors who request shares worth less than £1,000 will be given priority and there will be a discount of 5% on the market price of the shares.
To deter investors from making a quick buck, those who keep their shares for at least 12 months will get an extra bonus share for every 10 they own. This offer will be capped at £200 worth of shares per investor.
This is the biggest privatisation in the UK for more than 20 years and all the money raised will be used to reduce the national debt.
Investors will be able to apply for shares online and by post. If you would like updates on the sale details, register your email address at https://www.gov.uk/lloydsshares.
8. More shopping rights
If you buy a faulty item you now have 30 days from when you bought the product to demand a full refund, following the introduction of the new Consumer Rights Act 2015 on 1 October.
You also will no longer have to put up with multiple attempts by the retailer to mend or replace a faulty item before it offers a refund.
If you buy something and something goes wrong after 30 days but within the first six months, you’ll usually be entitled to a full refund if the item can’t be repaired or replaced. And you now only have to give the retailer one attempt at a repair or replacement before you can demand your money back.
To find out more about your new shopping rights see our feature.
9. Help for first-time buyers
First-time buyers were offered a helping hand onto the property ladder with the launch on 1 December of a new Help to Buy ISA. Like cash ISAs, these ISAs offer tax-free returns plus a bonus of up to £3,000 depending on how much you save. This money must be used to put down a deposit on a home and there are restrictions on how much you can save and when the ISA has to be taken out by.
Stamp duty in England and Wales is being raised on second homes from 1 April 2016. So if you are buying a property in addition to your main home, such as a buy-to-let or a holiday property, you’ll have to pay an extra 3% stamp duty from then onwards.