The election was of course uppermost in the Chancellor’s mind. He needed to convince us that he has the electors interest at heart and will continue to manage the economy and the recovery will continue. It was quite an electioneering opening “Britain has grown faster than any other major economy in the world and more people have jobs in Britain that before. Britain is walking tall again” It was a budget for “the makers, the doers and the savers”
With more money in the pot available from increased taxation revenues from businesses due to the fall in oil prices and low interest rates paid on the government lower debt interest, sale of bailout shares, clamping down on tax avoidance amongst others, this was expected to be a generous budget although it was not as crowd-pleasing as expected .As stated by the Chancellor the majority of any surplus would be going to pay off the deficit.
Pensioners make up a large part of the electoral vote and the annuity and savings changes were not unexpected.
Business Rates which are said to have risen by 25% over the past 6 years (normally based on the value of the property) stop businesses re- investing. These need a thorough looking at but this was not tackled although there will be a “review”.
Here is a key point summary
Growth & Inflation
GDP growth forecast for 2015 revised up to 2.5% and 2.3% for 2016
OBR revises 2015 inflation forecast down to 0.2%
2014/2015 borrowing forecast is revised down to £90.2bn and borrowing for 2015/16 of £75.3bn £39.4bn in 2016-7, £12.8bn in 2017-8 before reaching a £5.2bn surplus in 2018-9
Government debt as a proportion of GDP to 80.2% for 2015/2016
For first-time buyers, there was the creation of a “Help to Buy” ISA, with the government matching 25% of contributions towards the deposit for a new home. . For every £200 saved for a deposit, the Government will top it up with £50 with a maximum bonus of £3,000 on £12,000 of savings.
Wine duty remains unchanged
Petrol duty frozen – September’s planned increase cancelled
Tobacco duties set to rise by 2% above inflation, equivalent to 16p on a packet of 20 cigarettes
Duty on scotch whiskey and other spirits to be cut by 2%.
Cigarette duty will be 2% above inflation
Cider duty cut by 2p a pint
Beer duty cut by 1p a pint.
Stocks , Savings and Pensions
Pensioners will be able to access their annuities and tax rate paid on selling or exchanging an annuity would now be taxed at 20% for basic rate taxpayers, 40% or 45% for higher rate taxpayers. Although this begs the question how do you value a annuity and who will buy them ?
Pension pot lifetime allowance to be reduced from £1.25m to £1m from next year.
Annual savings limit for ISA increased to £15,240
The personal income tax allowance will rise to £10,800 from April 2016 and £11,000 from April 2017( Rate for 2015/2016 £10,600 2014/2015 £10,000.)
Higher rate of tax rises to £43,300 in 2017/2018 (£41,540 for 2014/2015, £
Corporation tax will be cut from 21% to 20% in two weeks time
Companies that move their profits overseas to avoid tax will be subject to a “diverted profits tax” from April, the chancellor has said.
Class 2 National Insurance contributions for the self-employed to be abolished entirely in the next parliament.
Employers’ National Insurance contributions for under-21s to be abolished from this April, and for young apprentices from April 2016.
View our useful current tax rate 2014/2015 tax table