Emergency Budget 2015 key points
On 8th July Chancellor George Osborne delivered his first Budget since the election. This Budget was not influenced by being part of a coalition, as in recent Budgets, and was expected to deliver more austerity in an attempt to balance the books.
Here are the key points and how they affect your finances.
Emergency Summer Budget in bullet points
Personal Taxation
- personal allowance to rise to £11,000 next year
- personal allowance to rise to £12,500 by 2020
- 40% income tax threshold raised from £42,385 to £43,000 next year
- tax relief on mortgage interest payments for buy-to-let properties will be limited to basic rate of income tax of 20%
Other taxes
- no rise in fuel duty this year
- major changes to vehicle excise duty to pay for a new maintenance and road building fund
- new vehicle excise duty bands mean that 95% of drivers will pay £140 a year
- no changes to alcohol and tobacco duty
- rent-a-room relief to rise to £7,500
Pay
- new national living wage will be introduced for all workers aged over 25 from April 2016 starting at £7.20 per hour rising to £9 per hour by 2020
Pensions
- total tax free pension contributions to be reduced for individuals with incomes on excess of £150,000 by £1 for every £2 earned. That means that those earning £210,000 or more can only put £10,000 a year in to a pension rather than £40,000 like everyone else.
Inheritance Tax
- Inheritance tax threshold to increase to £500,000 per person from 2017
- each person will have an extra £175,000 'family home allowance' added to their existing £325,000 personal threshold. The £175,000 relates to your main residence which is passed on to children or grandchildren. When the £175,000 is introduced in April 2017 it will only be at £100,000 before it rises to £175,000 by 2020/21
- married couples and civil partnerships will be able to pass on assets worth £1m (including family home) without any liability to inheritance tax
Welfare
- income threshold for tax credits to be reduced from £6,420 to £3,850
- tax credits and Universal Credit to be restricted to two children, for children born after 2017
- working age benefits to be frozen for four years, maternity pay and disability benefits are exempt
- disability benefits will not be taxed or means tested
- rents in social housing sector to be reduced by 1% a year for the next four years
- subsidies for social housing will be phased out for tenants earning more than £30,000 (£40,000 in London)
- 18-21 will not be allowed to claim housing benefit automatically with a new 'earn or learn' obligation introduced
- the annual household benefit allowance to be reduced to £20,000 (£23,000 in London)
- student maintenance grants to be replaced with loans from 2016-2017
Business
- Corporation tax to be cut to 19% in 2017 and 18% in 2020
- permanent 'non-dom' status to be abolished from April 2017
- increased budget for clampdown on tax avoidance
