This April saw the introduction of a number of changes to tax rates, household bills and State benefits rates. Here are some of the highlights affecting pensions and savings.

PENSIONS
Anyone with savings in a Defined Contribution (DC) pension plan can now withdraw up to £1,500 to pay for pensions advice. The withdrawals will be exempt from Income Tax and National Insurance. The Pensions Advice Allowance allows three separate withdrawals of £500, which must be made in different tax years and must be paid directly to a regulated financial adviser.

The advice bought with the allowance must be related strictly to pensions and retirement and may include how to draw an income from all pension pots, or a stocks and shares ISA, whether that income will be sufficient, whether a drawdown product is appropriate, and how to fund care in old age.

The money purchase annual allowance (MPAA) is reduced from £10,000 to £4,000. This change only affects those people who have already accessed their pension savings flexibly but are continuing to pay into a pension arrangement and therefore receive tax relief on these further contributions. The change is designed to limit the extent to which pension savings can be ‘recycled’ to take advantage of tax relief on pension contributions.

SAVINGS
The annual allowance for saving into an Individual Savings Account (ISA) increases from £15,250 to £20,000, for cash or stocks and shares ISAs. No tax is due on income or any capital gain from an ISA.

The new Lifetime ISA (LISA) launches on 6 April. It is available to anyone between the ages of 18 and 40. The government will add a 25% bonus to savings after one year to a maximum of £1,000 per year. You can access the money without incurring a withdrawal charge of 25% only to buy a property for the first time or when you are over 60 to fund retirement income. The withdrawal charge does not apply if you are transferring to another Lifetime ISA with a different provider or if you are terminally ill.