Government budget july 2015

Government Budget July Budget July 2015

2015 THE KEY ANNOUNCEMENTS THAT COULD INFLUENCE YOUR FINANCIAL PLANNING DECISIONS IN THE YEAR AHEAD AND BEYOND

GOVERNMENT BUDGET JULY 2015

WHAT THE CHANCELLOR HAD TO SAY THE KEY ANNOUNCEMENTS AT A GLANCE Welfare & Pensions  Working age benefits to be frozen for four years – including tax credits and local housing allowance  Disability benefits will not be taxed or means – tested  Rent for Social Housing will reduce by 1% a year for the next four years  Higher income households in social housing will be required to pay rent at the market rate  Tax credit & Universal Credit will be restricted to two children, for those born after April 2017  Reduce earnings level for tax credits withdrawal from £6,420 to £3,850  “Earn to Learn” obligation means 18 to 21 year olds will not automatically be entitled to claim housing benefit

 State pension triple lock will be protected  Annual tax relief on pension contributions limited to £10,000 p/a  The government has delayed its plans for a second-hand annuity market to 2017

Personal Taxation & Pay  The introduction of a new National Living Wage for all workers aged 25+, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020  Inheritance tax threshold will be increased to £1m from 2017  The point at which people start paying income taxt at 40p to rise from £42,385 to £43,000 next year

 Personal tax allowance to rise to £11,000 next year  Employment & Support Allowance payments for those deemed able to work will be “aligned” with Job Seeker’s Allowance for new claimants  Green Paper published on proposals for “a radical change” to pension saving systems

The state of the economy  1 million extra jobs to be created by 2020  The economy grew by 3% in 2014  2.4% growth forecast in 2015, as was predicted in March, with 2.3% & 2.4% in the following years

GOVERNMENT BUDGET JULY 2015

Business

 New apprenticeship levy for large employers

 Permanent Non-Dom status to be abolished – From April 2017, anyone who has been living in the UK for 15 of the past 20 years will pay the same level tax rate as other UK citizens

 Bank levy rate to be gradually reduced over the next 6 years and a new 8% surcharge on bank profits introduced from January 2016

 £7.2bn to be raised from clampdown on tax avoidance and tax evasion with HMRC budget increased by £750m  Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5 % from November

 Corporation tax to be cut to 19% in 2017 and 18% in 2020  Climate change levy exemption for renewable electricity to be removed  National Insurance employment allowance for small firms to be increased by 50% to £3,000 from 2016

Public Borrowing/deficit/ spending  Deficit to be cut at the same pace as during last Parliament – securing a budget surplus a year later than planned 2019-20  Borrowing set to fall from £69.5bn this year to £43.1bn, £24.3bn and £6bn before hitting a £10bn surplus in 2019-20  Debt as a share of GDP to fall from 80.3% this year to 79.1%, 77.2%, 74.7%, 71.5% and 68.5% in successive years  1% public sector pay rise to continue for the next four years

GOVERNMENT BUDGET JULY 2015

 £37bn of further spending cuts by 2020, including £12bn of welfare cuts and £5bn from tax avoidance

 Student maintenance grants to be replaced with loans from 2016-17, to be paid back once people earn more than £21,000 a year

 £30m for new body to promote integrated transport – including use of Oyster cards – in the north of England

Defence

 The maintenance loan will increase to £8,200

 Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate income tax

 Government to spend 2% of GDP on defence every year, meeting Nato target  Spending on defence to rise in real terms every year during the Parliament  New £1.5bn Joint Security Fund to be created

Health & Education  NHS will receive a further £8bn by 2020 (in addition to the £2bn already announced)

 New University professorships to be created to mark the Queen’s 90 th Birthday

Housing/Infrastructure /transport/regions/ culture  Control over fire services, planning and children’s services to be handed to consortium of 10 councils in Greater Manchester  Discussions on devolution of services to Sheffield, Liverpool and West Yorkshire

 Rent-a-room relief scheme to rise to £7,500

Alcohol, tobacco, gambling & fuel  No Rise in fuel duty with rates continuing to be frozen  Major reform to vehicle excise duties to pay for a new road building and maintenance fund in England  New VED bands for new cars to be introduced from 2017, pegged to emissions – 95% of car owners will pay £140 a year