Chancellor George Osborne described in his final Budget how thanks to the hardworking people of Britain, Britain is “walking tall again” and urged people not to return to the “chaos of the past”! He emphasised his commitment to helping those who “work hard and want to get on”. So how will George Osborne’s measures impact on our personal finances?
Here’s our Budget 2015 summary for individuals of the key announcements:
Minimum Wage
- for 21+ year old workers, the rate will rise by 20p to £6.70p per hour from October 2015.
- for workers aged 18-20, the rate will rise by 17p to £5.30p per hour from October 2015.
- for workers aged under 18, the rate will rise by 8p to £3.87p per hour from October 2015.
- people on minimum wage will be paid £8 an hour by 2020.
Pensions
- from April 2016, the lifetime allowance will drop from £1.25 million to £1 million.
- the lifetime allowance will be indexed to protect pension pots from inflation from 2018.
- pensioners will be able to access the money held in their annuities.
- the 55% tax charge on accessing annuities will be abolished next year and replaced with tax at the marginal rate.
Married couple’s allowance
- the transferable tax allowance for married couples to rise to £1,100.
Income tax
- the personal Income Tax allowance will be raised to £10,600 from April 2015.
- it will rise to £10,800 from April 2016 and £11,000 from April 2017.
- the threshold for the higher rate of Income Tax will increase from £42,385 in 2015/2016 to £42,700 in 2016/2017 and further increased to £43,300 by 2017/18.
ISAs
- more flexible ISAs will allow people to remove money and return it back in the same year without losing their tax-free entitlement.
- Help to Buy ISAs will help first time buyers get on the property ladder.
- for every £200 savers deposit in a Help to Buy ISA, the government top it up by 25% (£50) up to a limit of £12,000.
Personal savings
- from April 2016, the first £1,000 of the interest earned on savings (other than ISA’s) will be tax-free
- the allowance for higher rate taxpayers will be set at £500.
- the allowance will not be available to additional rate taxpayers.
Capital Gains Tax
- the annual Capital Gains Tax exemption has increased from £11,000 to £11,100.
Inheritance Tax
- plans were announced to review the use of Deeds of Variation (DOV) for tax purposes. Currently the use of a DOV can enable the redirection of a deceased person’s assets from one person to another and can in some instances produce an Inheritance Tax saving.
Duties
- the Chancellor announced a 1 pence cut on beer duty.
- cider and spirit duties were cut by 2%.
- fuel duty will not increase in September as previously planned.
- duty on tobacco to increase by 2% above inflation.
