The Chancellor of the exchequer announced the Budget 2015 at midday today, delivering an upbeat assessment of the nation’s economic outlook and outlining a positive Budget which the Conservatives hope will put them in the commanding position in the pre-election polls.
The Chancellor took the opportunity early on to boast about the nation’s growth that the Conservative Government had overseen, with 2014 being measured at 2.6% and 2015 being forecast at a further 2.5%. GDP per capita has risen by 5% and inflation is due to fall to 0.2% this year.
George Osbourne was keen to mention the savings his Budget would provide to the individual, with much discussion prior to the Budget around pension reforms. Here’s a look at the key points from the 2015 Budget and what areas will affect you.
Budget 2015 – Main Points
- Help To Buy ISA – the Government have pledged to add £50 for every £200 you save.
- Abolition of the self-assessment tax return.
- Increased personal savings allowance, encouraging more individuals to save for the future.
- From April next year, individuals who have an annuity will be able to sell it on.
- Investment in superfast broadband means Government target speeds of 100mbps for every household
- Minimum wage is set to rise in October to £6.70 an hour, with apprentices also receiving a pay rise to £3.30. Minimum wage is projected to reach £8 an hour by 2020.
Key Points For Individuals
The Conservative party was keen to emphasise individuals saving for the future – and providing incentives for them to do so. Alongside auto-enrolment which is being rolled out across all places of work in the UK, they have announced:
- Help To Buy ISA – The help to buy ISA is a government initiative which will see first-time buyers given a helping hand in their quest to save up enough to buy instead of rent. The ISA will see every £200 invested by the individual topped up by £50 from the government up to a maximum of £3000. This means the limit for investment is £12,000 from the individual – taking it up to £15,000.
- Personal Savings Allowance – The personal savings allowance has been increased to £1,000. This means the first £1,000 of your savings income is removed from income tax. Higher-rate taxpayers can also benefit from an increased PSA, however their allowance has been set at £500.
- Personal Tax Allowance – The amount you can earn before being subject to income tax has risen again to £10,600. The Government has also pledged to rise this year on year, with the total rising to £11,000 in 2017.
- Fuel Duty Freeze – An expected fuel duty rise has again been frozen. It is estimated that the average family will save £10 every time they fill up.
- Annuities – From April 2016, people who already have an annuity will be able to sell it on, so that they too can benefit from the pension freedoms announced at last year’s Budget. The sale is without having to pay at least 55% tax on it, but from April 2016, the tax rules will change so that people who sell an annuity will pay tax at their marginal rates of Income tax instead of 55%.
- Higher Rate Threshold – The threshold at which Higher rate tax starts, £42,385 for 2015/2016 is set to increase by £315 in 2016-17, and by £600 in 2017-18 – taking it to £43,300 in 2017-18. This is the rate from which 40% tax is paid.
Key Points For Businesses
The big win in the business world was for farmers who will be able to average their profits over 5 years to protect themselves from the volatility that comes with their industry. The Government also took moves to protect the local paper, proposing a tax relief to alleviate the financial strain.
- Corporation Tax – The main rate of corporation tax has been cut to 20%, the joint lowest in the G20.
- Abolition of Employer NIC contributions for under 21s – This will mean employers will save an average of £332 per employee.
- Start-up Loans – £140m has been pledged to fund more than 27,000 start-up loans for businesses.
- Red-Tape Challenge – The RTC has identified 3,200 regulations to be scrapped or improved, bringing over £1bn in annual savings to businesses.
- Company Car Taxation Legislation will be introduced to increase the appropriate percentage of the list price of company cars subject to tax by 3 percentage points for cars emitting more than 75 grams of carbon dioxide per kilometre to a maximum of 37%.
What Else Was Announced?
- VAT – Registration and Deregistration thresholds up by £1000 to £82,000 and £80,000 respectively
- Unemployment – Will fall from 5.7% to 5.3% at the end of 2015.
- Alcohol duty -Cut by 1p for beer. Cider, whisky and other spirits cut by 2%. Wine duty frozen.
Whilst most of the sector focus was on the energy industry, with crude oil prices falling drastically in recent weeks – both the agriculture and charity sectors received some positive news to enjoy:
- Energy – £1.3bn of support for the oil and gas industry through a series of tax cuts to petroleum revenue levies, supplementary charges and a tax allowance.
- Agriculture – Profit averaging for farmers period extended from two to five years will give farmers additional security as typically they have volatile profits due to uncontrollable factors such as the weather.
- Charities -The amount of small donations charities receive getting an extra 25% top up payment in respect of gift aid without needing paperwork is increased from £5,000 to £8,000 a year.
- Education – Loans of up to £25,000 for PhD students in an attempt to convince people to take up postgraduate research.
- Enterprise Zone – Ten enterprise zones across Britain, including Great Yarmouth, will receive £100 million in investment to increase economic growth and development.
- Business Rates – Four regions in the UK including Cambridge can now collect and keep 100% of additional business rate growth.