Chancellor, George Osborne, delivered the 2015 Budget (his sixth) yesterday. In his final Budget before the general election, he positively set the tone of the speech by saying, “Today I report on a Britain that is growing creating jobs and paying its way.”
But what exactly did the Chancellor say and, more importantly, what did it actually mean?
We kept a close eye on the announcements and have produced a quick summary of the main points to help you digest the information that is relevant to you.
Economy and public finances
- The UK economy had the fastest annual growth among G7 economies in 2014, and the strongest annual growth since 2007
- Within 15 years the UK has the potential to overtake Germany and have the largest economy in Europe
- National debt at 80.4% of GDP in 2014-15, forecast to fall to 80.2% in 2015-16, and further to 71.6% in 2019/20
- Inflation set to fall to 0.2% this year
- Unemployment rate set to fall to 5.3% this year (now at 5.7%)
- Welfare bills set to be an average of £3 billion lower each year than estimated in the Autumn Statement
- Treasury to sell at least a further £9 billion of Lloyds Bank shares in the coming year
- Treasury also to launch sale of £13 billion of mortgage assets from Northern Rock and Bradford & Bingley
- Budget surplus of £5.2 billion forecast for 2018/19 and £7 billion for 2019/20
- Borrowing forecast for this year revised downwards to £90.2 billion, then £75.3 billion in 2015/16
Small Businesses & Start-ups
- Small business rate relief will be doubled for a further year to March 2016
- New National Plan to bring ultra-fast broadband to almost all UK homes
- Up to £600m to clear new spectrum bands to improve mobile networks
- Investment in science and innovation, including £140 million in world-class research on the infrastructure and cities of the future, and £40 million in research into the 'Internet of Things'
- Enhancement of R&D relief for SMEs increased to 230% - already announced in the Autumn Statement
- Funding to support exporting to China increased - £15m in 2015-16
- From April, Corporation Tax for businesses making profit in excess of £300,000 will reduce to 20%
- Annual bank levy to rise to 0.21%, raising an extra £900m
- Personal tax-free allowance is set to rise from £10,600 in 2015-16 to £10,800 2016-17 and then to £11,000 in 2017-18- cutting for 27 million people
- Higher tax rate threshold will rise from £42,385 this year to £43,300 by 2017-18
- New criminal penalties for tax evasion (including advisers)
- Annual Paper tax returns to be scrapped completely
- Death of the tax return - Annual self-assessment return to be replaced by individual tax accounts
- Transferable tax allowance for married couples at 10% of personal allowance to be £1,100 by 2017
- To support five million people who are self-employed, Class 2 National Insurance Contributions to be abolished entirely from next year, and Class 4 contributions are to include a new benefit test
- National Insurance Contributions (NIC) to be abolished for employing under 21s
- Accountants and tax advisers working with contractors will be subject to new anti-avoidance legislation
- Clampdown on Umbrella companies using travel & expenses to increase contractor take home pay to be detailed in the small print
Pensions and Savings
- Lifetime allowance on pension tax relief reduced from £1.25m to £1m, but index linked from 2018 to protect those in place. These measures will save £600m annually.
- Basic rate tax payers to get £1000 tax free personal savings allowance from April 2016
- Increase in annual ISA’s savings limit to £15,240 from next year and you can withdraw and reinvest for the first time.
- First £1,000 of interest on savings will be tax-free for basic taxpayers. Allowance capped at £500 to ensure higher earners get the same benefit.
- Further Pension reforms to allows pensioners to cash in their annuities and pay tax at their marginal rates
- A review into inheritance tax avoidance through deeds of variation; more details due by Autumn
- Introduce a new Help to Buy Isa to help first time buyers and contractors - will allow government to top up by £50 every £200 saved for a deposit (up to a maximum £3,000)
- Fuel duty will be frozen again for 2015
- Beer duty cut by 1p
- Cider and spirit duty cut by 2%
- Wine duty frozen
- £25m to support army veterans, including nuclear test veterans
- £100m in investment in the race to driverless technology.
- Rise in benefit in kind charges for electric vehicles.
- Farmers averaging relief for income tax purposes extended to 5 years
- Automatic Gift Aid limit for charities to be extended to £8,000
- The Office for Civil Society will engage a partner to deliver subsidised fundraising training to small charities in 2015-16
Oil & Gas sector
- £1.3bn tax breaks and support for North Sea oil and gas
- Petroleum tax reduced from 50% to 35% and supplementary tax cut from 30% to 20%
- Introduction of a new Investment Allowance
- Further reduction to the supplementary tax charge on oil and gas companies
- Boost to UK’s “Northern Powerhouse” - £13bn investment into travel, £11m will be invested in tech hubs in Manchester, Leeds and Sheffield, and enterprise zones in the area will be expanded
- Greater Manchester will be able to keep 100% of additional business rates it collects
- Support for Ten Enterprise Zones to create growth and jobs
- Proposals for a £1bn tidal lagoon in Swansea Bay to generate green electricity
- £7bn in transport investment for the South West including new air links
We will be issuing a complete summary of the 2015 Budget tomorrow, which will offer informative comments to help you assess the likely effect that the proposed changes may have on you, your family and your business for the year to come. In addition, we will also be issuing a useful summary of the new Tax Rates and Allowances.
Written in plain English, the summary will be added to the Budget section of the website, but if you would like to receive a digital copy please let our marketing team know at firstname.lastname@example.org