A new government brings a new era for our finances and, despite the desperate need to reduce public-sector debts, there is actually some good news on taxes and pensions.
Although not immediately affordable, the government says that it will substantially increase income tax thresholds and eventually everyone earning below £10,000 will pay no tax. Another piece of excellent news is that Equitable Life investors will at last receive compensation. This huge scandal should have been sorted out years ago and the sooner victims receive money, the better.
There will be some positive pension changes too. For example, the requirement to buy an annuity by age 75 will end. This welcome reform should enable people to pass their pensions to their heirs, rather than to an insurance company, when they die.
Also, the government wants to introduce more flexibility for pensions, allowing some money to be withdrawn before retirement. This is good for younger people, who are frightened of locking money into a pension for many decades in case they need it urgently in a few years' time. There is even some improvement for state pensions. The basic state pension will gradually become more generous, with a 'triple guarantee' that it will increase by 2.5 per cent a year, or prices or earnings inflation, whichever is higher.
So far, so good. But it's not all positive news, I'm afraid. On the negative side, capital gains tax on second homes, shares and non-business investments - currently 18 per cent - may more than double to bring it into line with income tax. Savers have had a really raw deal lately and the last thing they need is another tax burden. I really think the government should reduce capital gains tax rates the longer an investment is held in order to encourage long-term investment and avoid taxing inflationary gains. You might consider selling now to lock in gains at the current rate (perhaps with a lower taxpaying spouse buying them back).
There are also fears, as yet unconfirmed, that higher rate pension tax relief could be abolished, so top-rate taxpayers should probably make the most of current rules and top up their pension fund quickly, just in case.
After years of policy and regulation that discouraged saving, it will not be easy to sort out our dreadful debt problems.
However, if the new government improves consumer protection and moves from a culture of borrowing to one of saving and investing, I believe we can put our economy back on the right track and ensure a better future for us all.