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Budget 2015 – an overview

Budget 2015 – an overview

Category: Economy

Updated: 19/03/2015
First Published: 18/03/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Chancellor George Osborne presented his final Budget for this Government earlier today, and while many of the announcements had been largely predicted, there were a few surprise measures thrown in along the way. Here, we outline the key points:

  • The personal allowance, or the amount of income you receive before having to pay income tax, will rise to £10,600 at the start of the new tax year. It'll then rise to £10,800 in the 2016-17 tax year and £11,000 the year after, with the Marriage Allowance increasing accordingly.
  • The higher rate threshold – the point at which higher earners have to pay 40% income tax – will also rise, taking it from £42,385 this year to £42,700 in 2016-17 and £43,300 in the following tax year. It's touted as being the first above-inflation rise in seven years.
  • Tax avoidance measures were strengthened.
  • Fuel duty will be frozen, with the planned increase being scrapped.
  • Beer duty will be cut by 1p, while duty on cider, Scotch whisky and other spirits will be cut by 2%. Wine duty will be frozen.
  • Business rates have been amended – corporation tax will be cut to 20%, and small business rate relief will be extended.
  • National Insurance contributions will be abolished for employing those under-21 from this April and for apprentices from the next tax year.
  • Class 2 National Insurance contributions for the self-employed will be abolished.
  • An interesting one – the annual (or self-assessment) tax return is being abolished, with revenues being automatically uploaded instead.
  • A pledge to boost investment in broadband and increase the number of superfast connections.
  • Tax cuts have also been announced to encourage North Sea investment, following the dramatic drop in oil prices.
  • More flexibilities have been confirmed for pensioners locked into annuity contracts, a measure that was announced earlier this week, allowing them to "sell" the income they receive by abolishing the prohibitive tax charge of 55%.
  • The Chancellor also confirmed that the lifetime allowance on pension pots will be reduced from £1.25m to £1m.
  • There were some big announcements for savers, notably the idea of a flexible ISA. The tax-free allowance will increase to the planned £15,240 in April, but from September, the rules will change so that people can take money out of the account and put it back in at a later date without losing their tax-free entitlement.
  • Perhaps the biggest surprise was the announcement of a Help to Buy ISA. A savings product designed for first-time buyers trying to build a deposit, for every £200 saved, the Government will top it up with £50, up to a maximum of £3,000 in any tax year.
  • A personal savings allowance was also announced: from April next year, the first £1,000 in savings income will be exempt from tax (the first £500 for higher rate taxpayers), a move that's expected to bring 95% of taxpayers out of savings tax altogether.

So there you have it – a quick overview of the measures announced in today's Budget. Will any of them affect you? Chances are, a few of them could, so we'll cover some of the most pressing changes in more detail over the next few days.

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