article: A new personal savings allowance of £1,000 will be introduced in April next year, removing the first £1,000 of savings income from income tax. From later this year, people will be able to move money in and out of Isas without infringing their tax free contribution limit. And a new "Help to Buy" Isa will be launched to help people save for a deposit. As announced a few days ago, the government will consult on letting people who have bought annuities with their pension pots sell them, in return for a lump sum. Mr Osborne said the new personal savings allowance would come into effect in April 2016. This would, he said, create tax-free banking for almost the entire population. However, higher-rate taxpayers will benefit from a smaller personal savings allowance of only £500. Users of the BBC News app tap here for the Budget Calculator. And anyone earning more than £150,000 a year will not receive the benefit of the new savings allowance at all. This change, along with more flexibility for Isas, will cost taxpayers more than £1bn in 2016-17 and more than half a billion pounds each year thereafter. An important knock-on effect of these changes will be that from next April, banks and building societies will no longer deduct 20% income tax automatically from savings held outside an Isa. The chancellor hailed this as a major piece of tax simplification. "People have already paid tax once on their money when they earn it. They shouldn't have to pay tax a second time when they save it," he said. "With our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished." Richard Lloyd of the consumers' association Which? said: "The tax break and new flexibilities on savings will prove popular with the millions who have got a raw deal on their savings in recent years. "But there are still many savers whose money is languishing in extremely poor paying accounts, so the financial industry must now play fair and help people get a better return." On the new Isa rules for what he called a "fully flexible Isa", Mr Osborne explained that so long as Isa money is taken out and replaced during the same tax year, such a move would not count towards the annual Isa contribution limit, which is due to rise in any case to £15,240 this coming April. "If you take that money out, you lose your tax-free entitlement, and so can't put it back in," he said. "With the fully flexible Isa, people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement." However, this new flexibility will apply to cash Isas only, and not to stocks and shares Isas. Mr Osborne said the change would be scheduled for this autumn after consultation. Iain McCluskey of accountants PwC said: "The very significant Isa allowance increase over this Parliament has meant that many savers already pay no income tax on their savings.
summary: Four big planned changes to encourage saving were outlined by the chancellor.