Recently we saw the Chancellor of the Exchequer, George Osborne, announce his 2015 budget. With it came some major changes effecting workers, savers and first time buyers. Below we have explained some of the main points that were talked about and introduced.
Growth & Employment
The Chancellor talked about how the UK has seen the fastest annual growth among all of the G7 countries and the European Union. With record employment in the UK, and the jobless rate to fall to 5.3% this year, with Inflation projected to fall to 0.2% in 2015.
The Office for Budget Responsibility (OBR) announced that Britain’s economy grew by 2.6% last year. Growth in 2015 is predicted at 2.5%. This compares to 2.4% predicted in December and 2.1% predicted a year ago. The OBR also revised its 2015 inflation forecast down to 0.2%.
The personal tax allowance will now be increased to £10,800 in April 2016 and £11,000 in April 2017. Also, the threshold where people start to pay 40% income tax will be raised above inflation from £42,385 in 2014-5 to £43,300 in 2017-8. A tax allowance for married couples will be raised from £50 to £1,100, and annual paper tax returns will be retired and replaced by on-going digital accounts.
The Chancellor announced the introduction of a new ISA savings scheme for first time buyers, the Help to Buy ISA, which will mean the government, will to top up by £50 every £200 saved for a deposit on a house. Anyone over the age of 16 who has never owned a home will be able to qualify for this unique first time buyer ISA, and you will be able to keep it until you are ready to buy a home.
Osborne also announced changes to the personal savings allowance. The first £1,000 interest on savings income will be tax-free for basic rate taxpayers and a £500 allowance for 40% tax ratepayers. The annual ISA savings limit will also increase to £15,240, and a fully flexible ISA was announced, which means savers can now withdraw money from their ISAs and put it back later in the year without losing any of their tax-free allowance.
Pension pot lifetime allowance, the allowance for pension savings that can be accumulated free of tax, will be reduced from £1.25 million to £1 million in 2017, which will save £600 million a year. Pensioners will now be able to trade in their annuities for cash, and the government might make it mandatory for people who want to sell an annuity to access financial advice.
Mental health services will get £1.25 billion in extra funding.
Alcohol and Tobacco
Beer Duty has been cut by 1p a pint and cider by 2p a pint. Some spirits and wine duty has been frozen.
Tobacco duty is set to rise 2% above inflation, which is the equivalent of 16p on a pack of 20 cigarettes.
Other main points
Charities for British service men and women will receive £75 million.
£600 will go towards improving mobile phone coverage nationwide, including remote areas and a commitment was made to deliver ultra fast broadband on all homes.
Funding will be given to libraries to provide WiFi.
These are the main points of the 2015 budget, which may affect you and your families finances. For a more in-depth look you can visit the government’s website where you can read the budget in full. If you would like any further information about your finances please give us a call on 0800 526 249.