Say what you like about George Osborne, he’s done right by investors.
Each of his budgets has had pokes, prods, incentives, gifts and straight-up bribes for private investors.
He’s steadily increased the Isa limit. He’s introduced Junior Isas for families. Loosened the rules on cash Isas. Allowed AIM shares in an Isa (that was a big one). Relaxed the rules on inheriting an Isa. Created an alternative finance Isa, and a Help to Buy Isa.
In 2014, he relaxed the rules on pensions, which gave retirees a lot more freedom to choose how to spend their money.
This year it’s the young investors’ turn.
The Tory tailwind
The biggest news is the Lifetime Isa.
The Lifetime Isa is open to adults under 40 who want to save towards buying a house or towards their pension.
They can put up to £4,000 a year into it, and the government will top that up by an extra £1,000 per year (until they hit 50). They can take the money out at any time to buy a home, but they’ll need to wait until they’re 60 if they want to use it to fund retirement.
You might have already heard of the Help to Buy Isa – that was last year’s savings giveaway. The new Lifetime Isa is more flexible and more generous, so savers can just transfer their Help to Buy funds into the new Lifetime Isa to get the benefits of it.
The average first time buyer is now 35. That number is rising, and those people are struggling. They’re Osborne’s target.
So that’s giveaway number one: an extra £1,000 for every £4,000 you invest.
Giveaway number two: the Isa limit has been raised by quite a lot, from £15,240 to £20,000. That’s the biggest raise in percentage terms ever, and it’s great news for… well, everyone!
Your first £20,000 invested in cash, stocks or shares, alternative finance and so on is tax free. No tax on dividends, and no tax on capital gains.
That brings us to the third and final budget giveaway: Osborne has slashed capital gains tax from 28% to 20% for higher rate taxpayers, and from 18% to 10% for basic rate taxpayers. That applies on everything from second homes, to stocks and shares held outside an Isa, to business deals.
The upshot of all this is: if you’re not actively investing your money, you’re missing a trick. Osborne may literally pay you £1,000 to do so… or at least he won’t take a penny off you, up to £20k…. or if you’re investing heavily, he’ll take a lot less away from you.
Osborne and I are on the same page. We know that investing is a smart, rewarding habit, and it’s easy to get started.
I’m in the business of guiding people through the world of investing. I show people how to invest intelligently in Penny Shares, and how it’s possible to rack up big returns from investing in tiny companies.
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