Marriage Allowance money is now up for grabs

July 17th, 2015 No Comments By Mof Gimmers

married with children profile Marriage Allowance money is now up for grabsAre you married? Well done you. You must be thrilled and exponentially more lonely as you’ve irritated everyone on Facebook with your incessant cooing and 3,000 wedding photos that look like everyone else’s stupid wedding photos.

Anyway, if you’ve got married and are earning £10,600 or less in the 2015 to 2016 tax year, you may well be able to reduce your partner’s tax by up to £212 thanks to the new Marriage Allowance.

It isn’t a huge amount of money, but it is worth getting on it, as basically, it is free money for doing absolutely nothing of note. Tories love people getting married and, in their minds, marriages stop things like riots from happening, so there you go.

So, grab all your personal details ever, and head over to the government’s dedicated website for Marriage Allowance and get registered, by clicking here.

If you’re married and earn a higher amount than the threshold, then maybe you can sell all those spare toasters you got from your wedding day? If not, maybe you could moan about it and be passive aggressive with your beloved while you shop for matching fleeces?

Budget round up- George’s July Budget

July 8th, 2015 2 Comments By Thewlis

Budget box 1332 19856581 0 0 7059907 300 Budget  round up  Georges July BudgetWell, George started his speech this afternoon by saying he was presenting a ‘Budget for workers’ and it was certainly very interesting. Here’s a round up of the main things that could affect your pocket from the Chancellor’s announcements.

Child Tax Credits/Universal Credit

Widely tipped  to be for the chop, the Chancellor duly cut Child Tax Credits and Universal Credit in a fairly hefty way. New claimants will not get the family element of tax credits and will be limited to claims for two children only. Existing claimants will see the earnings cap, before which amounts are not reduced, brought down from £6,420 to £3,450, with the taper rate on earnings above that level increased to 48%. The income disregard for income fluctuations between years will also be reduced from £5,000 to £2,500. The overall benefits cap will be reduced from £26,000 to £23,000 in London and £20,000 elsewhere.

National Living Wage

Totally taking the wind out of Labour’s sails, the Chancellor’s announcement of a £9 per hour minimum wage for the over 25s by the end of this Parliament will be welcomed across parties. The NMW rate will increase to £7.20 from next year. George is, of course, assuming that employers will have to pay people more so that they won’t notice the reductions in tax credits. Which is a great idea in theory, but many are predicting that those earning slightly more than hardly anything, who will see the biggest cuts in tax credits but the smaller increase in wages, will miss out.

But the idea of getting employers to pay more towards a living wage is accepted as a reasonable one, and giveaways like increasing the employers NI exemption for small employers and a reduction in corporation tax rates by 2% over the next five years.

Tax on individuals

Working towards his 2020 targets, the Chancellor announced that the personal allowance will go up to £11,000 from April 2016 (£11,200 for 2017/18), and at the same time the point at which the 40% tax rate kicks in will also go up to £43,000 from the current £42,385 (£43,600 for 2017/18).

However, the most radical change is that relating to dividends. Currently, dividends are subject to special rates, but benefit from a notional tax credit to reflect the corporation tax paid by the company. However, the Chancellor announced a new idea to scrap tax credits altogether, and make the first £5,000 of dividend income tax-free, with the next basic, higher and additional rates of tax being recalculated to be 7.5%, 32.5% and 38.1% respectively. This move should only make those receiving high levels of dividends end up paying more tax.

Pensions tax relief will be further restricted and the Government is consulting on changing the pension relief regime totally- mooting the idea that pensions would become more like ISAs, receiving no relief on the way in, but being tax free on the way out- another move that would penalise those paying tax at higher rates.

Additionally, no IHT will be due when passing down a family home worth up to £1m.

Other measures

There were a number of other things crammed into the Budget, and as widely predicted, non-doms who live in the UK will see their tax advantaged status withdrawn after being UK resident for 15 years. Fuel duty remains frozen and the rent a room relief threshold will go up to £7,500. Interesting, but likely bad news for landlords- from 2017 mortgage interest will only be deductible from rental income to the extent that it gets relief at the basic rate of tax (20%) rather than at higher rates.

Those aged 18-21 are coming off quite badly, with a ‘youth obligation’ to earn or learn (meaning it will be much harder for them to get any benefits) and the withdrawal of housing benefit for these groups. But don’t think about going into higher education- at the same time, University  maintenance grants will be withdrawn and replaced with additional student loans.

Finally, new classifications for new cars paying road tax will come in, with most cars paying a ‘standard’ rate of £140 per year, which is lower than the current average of £160. Second hand car rates will remain and no one will end up paying more than they currently do. Interestingly, road tax money is to be ring fenced to actually start paying for roads. What a novel idea.

So, as with all Budgets, there are winners and losers. Losers will include those currently claiming tax credits, even if they are the workers the Budget was aimed at. You will be a winner if you have a house worth £1m.

Amazon still paying a paltry amount in tax

June 26th, 2015 6 Comments By Mof Gimmers

amazoninstant Amazon still paying a paltry amount in taxAmazon are doing great in the UK, shifting £5.3bn in sales from British shoppers. Not bad eh? Well, as per, there’s an issue with how much tax they’re paying. Apparently, they paid £11.9m in corporation tax last year, which barely buys a decent centre forward these days.

Accounts filed at Companies House show that made a profit of just £34.4m (in the 12 months to 31 December) which means they only had to pay a relatively small amount of tax. However, seeing as people in the UK account of 10% of Amazon’s entire sales, something is going awry here.

Only last month, Amazon announced that they’d started booking UK sales through a British subsidiary after they’d sent their European sales through a subsidiary in Luxembourg for years. Of course, in Luxembourg, everyone enjoys lower tax rates!

The government are keen to get this all sorted out, and you’d expect that all these big businesses will be looking at moving their UK-bases to somewhere else, to increase profits. It is something that the Chancellor will have to play very carefully, or a load of big businesses will be off so quickly, we won’t see their arses for dust.

Of course, Google, Apple and Facebook are all facing similar criticisms too, and between them, they employ a lot of people in the UK.

According to reports, Facebook paid annual corporation tax of £3,169 here, which is absolutely remarkable. It is amazing what a creative accountant can do with numbers.

Jonathan Isaby, chief executive of the TaxPayers’ Alliance, said: “You can understand people’s anger at organisations like Amazon perceived not to be paying their fair share, but our frustration should be focused on the politicians and bureaucrats who have created our ludicrously complicated tax code.”

cash 300x225 Nice little earner  take a backhander from HMRCTimes have been tough, and what with summer holiday season coming up, who wouldn’t like a nice little extra in their pocket? Well, it seems there is a quick and easy way to get some spare cash, and all you have to do is snitch on your ex-partner/significant other/neighbours to HMRC…

New figures show that backhanders payments to tax informants have jumped by almost 50% in the last year. In 2014/15 a record £600,000 was paid to people who had reported suspected tax dodges by calling HM Revenue & Customs’ (HMRC) confidential telephone hotline, with around 100,000 calls made, compared with £402,000 paid out the year before, and a similar amount (£395,000) in 2012/13.

Now, mathematicians will have spotted that £600,000 in payments compared with 100,000 calls does not add up to a fat lot of cash per call. But many of the callers to the helpline do not necessarily have a pecuniary motive behind the call. The majority of people who tell tales on report the tax affairs of others are bitter ex-wives (or husbands) or disgruntled former work colleagues. Sources suggest that a reward of between £50 and £1,000 is most commonly given, but only if the information leads the taxman to a “big win”. Of course, should you have extremely lucrative information, that could also translate to a higher pay out.

But why have the amounts gone up this year? Either people are just getting grumpier with each other, or people are wising up to the fact that, if they are inclined to share some juicy details with HMRC, they may as well be compensated for their trouble.

The ‘hotline’ for tax informants was set up in April 2006, and launched with a £1 million advertising campaign that showed a worker ‘getting away’ without paying tax. However, what is less widely publicised is the fact that HMRC have discretion to pay you  for your information- after all, if you’re going to do it, you might as well do it properly. Adam Craggs, a tax partner at law firm RPC, suggested insightfully that “if too many people know that they can get paid for information supplied to HMRC they may be less willing to provide information for free.”

A spokesman for HMRC said: “The majority of people who provide information to us do so without any expectation of a financial reward. Cash rewards are discretionary and based on what is brought in as a direct result of the information provided.

“We receive information from a wide variety of sources and it is always used to make sure everyone pays what they should.”

Now, the only question that remains is- are HMRC backhanders undeclared income too…?

uber 300x169 Uber now stands accused of avoiding all UK taxControversial alternative taxi firm Uber has now been hit by a new campaign by black-cab drivers in London, and this time it’s war. The Licensed Taxi Drivers Association (LTDA) said the campaign is to “highlight what we are up against” and sees taxis and billboards across London slapped with posters claiming that Uber does not pay tax in the UK.

Uber burst onto the scene as a cheaper and easier alternative to traditional cabs in London. Many consumers like the convenience and affordability but ‘proper’ taxi drivers in many cities are understandably peeved that Uber does not appear to be subject to the same stringent regulations. Following concerns, Uber has been banned in a number of cities across the world, together with questions over the adequacy of its driver checks.

The posters show Uber’s senior vice president of policy and strategy Rachel Whetstone and Prime Minister David Cameron, with whom she is friends, beside a picture of Chancellor George Osborne – with an incorrect sum adding up to the fact that Uber apparently pays no tax in the UK.

“These ads are not anti-Uber,” Steve McNamara, general secretary of the LTDA told the BBC.

“The campaign is designed to highlight that the lobbying arm of Uber, a $50bn US company, has its tentacles embedded deep within Whitehall.

“The irony is that UK tax payers are subsidising Uber, a company that pays no tax in the UK, through tax credits and other DWP (Department of Work and Pensions) benefits paid to Uber drivers earning less than minimum wage.”

Uber, whose head office is in the Netherlands, said in response: “The campaign is simply incorrect. We pay taxes in every country we operate in and comply with all local and international tax laws, this includes the UK.”

Last year, Uber’s tax affairs were referred to HMRC by Transport for London following a complaint from Labour MP Margaret Hodge that it was opting out of the UK tax regime. The campaign will initially feature on 250 cabs, three advertising vans and on more than 25 digital sites across London.

Amazon to be probed by EU

June 11th, 2015 No Comments By Mof Gimmers

amazoninstant Amazon to be probed by EUThe EU are going after Amazon, investigating their business practices relating to the way they sell e-books.

There’s been long grumbles about Amazon’s way of doing business concerning e-books, and this probe will look at certain clauses in Amazon’s contracts with publishers, which are thought to be relating to the protection Amazon get from publishers offering rivals more favourable terms.

Margrethe Vestager, heading up the EU’s competition policy squad, said that she has a duty to make sure that Amazon’s arrangements with publishers were not harmful to consumers, by “preventing other e-book distributors from innovating and competing effectively with Amazon.”

“Our investigation will show if such concerns are justified.”

Of course, the EU is already snooping around Amazon, concerning their tax arrangement in Luxembourg. As we know, some gigantic companies are paying as little as 5% in corporate taxes, while smaller companies are stumping up 30%.

A potential double whammy of fines on the horizon, if Amazon are found guilty of being thoroughly shifty. We await the outcome.

savings 300x235 Access the new tax free savings allowance almost a year early?You may recall that, in March’s Budget the Chancellor announced a new plan to take 95% of savers out of tax on the interest on their savings. However, rather than wait until April 2016 to take advantage, why not start earning tax-free interest now. Interested?

You see, the new limits of £1,000 worth of interest for basic rate taxpayers, and £500 for anyone paying higher rate tax (if you pay additional rate tax at 45%, the Government reckon you can do without the savings allowance), take effect from April 2016,and at that point, given the vast majority of taxpayers won’t be paying tax, banks will stop deducting 20% tax at source (ie before you even receive your interest payment, as they do currently). However, if you are savvy enough to open an account that doesn’t pay interest until after 5 April 2016, then all of the interest falls into the 2016/17 tax year, and the new savings allowance applies.

And it’s official. A spokesman for HMRC told The Telegraph: “If a savings product, such as a one-year bond, taken out now, pays out interest before April 2016, the saver will not be able to benefit from the new personal savings allowance as they have a right to access interest before April 2016. But if they cannot touch the interest before April 2016, the saver can take advantage of the new allowance.”

So, what you are looking for in order to facilitate this wheeze are accounts that only pay interest annually. You might consider the market leading Virgin Defined Access E-Saver, which pays 1.41% gross, which would allow a basic rate taxpayer to stash £70,920 into the before breaching the savings allowance threshold, halved to £35,460 for  higher-rate taxpayers. However, closer inspection of the terms and conditions reveals that the annual interest isn’t paid on the anniversary of account opening, but is instead credited on 11 March each year. Which means the interest will be taxable, and the net equivalent is reduced to 1.13%

Consequently, the second best product on the market, the Paragon Bank Limited Edition Easy Access, begins to look more attractive, given its rate of 1.35% gross paid annually on the anniversary of the account opening, and therefore tax free so long as it falls within the savings allowance amount.

HMRC. Still rubbish.

May 12th, 2015 3 Comments By Thewlis

tax man HMRC. Still rubbish.It’s May. People are starting to go on holiday. Few people are thinking about their tax return, given the first filing deadline is a little under six months away. However, despite this being the notional ‘quiet season’ for HMRC, Which!!! are reporting numerous complaints from members, as it seems it is still just as impossible to get through.

Last December Which!!! performed scientific  tests to see how long it took for HMRC to answer the phone. While the average time was 18 minutes, some calls took over 40 minutes to get an answer. And as we’ve all heard, hang on for too long and the phone will just cut you off, leaving you no option but to just hang on the telephone for hours again.

Back then, HMRC admitted there was a problem, saying it had hired extra staff for the January ‘tax season’ and trained more people to take calls. New Government plans for a’digital account’ should improve the position, but that’s a way off and Which!!! think its “worrying” that people are waiting more than 20 minutes, and often up to 40 minutes, now to get through, when the pressure on phone lines is at its lowest. This “doesn’t bode well for later in the year.”

However, Which!!! are never ones to be daunted by the fact that their earlier investigation actually resulted in a poorer service than was offered previously, and they have now launched a poll asking people to log how long they have been waiting to speak to HMRC. Presumably they are planning to use this information to beat HMRC around the head at a later point.

If you are in the unenviable position of needing to call HMRC, prevailing advice seems to be to get up early- the general enquiries number (0300 200 3300) and self-assessment helpline (0300 200 3310) both open at 8am, so early birds get through much quicker. Hopefully.

McDonald’s next to face tax probe?

May 5th, 2015 1 Comment By Mof Gimmers

mcdonalds McDonalds next to face tax probe?People are deserting McDonald’s and, to make matters worse for the beef dealers, the EU’s competition commissioner has floated the idea of expanding a corporate tax investigation to McD’s.

Magrethe Vestager said that her charges were looking at whether or not they should launch an inquiry following claims by campaigners and unions of an alleged deal with Luxembourg, which basically allows the burger vendor to hugely reduce their tax bill on European sales.

This investigation would be added to the one that is already swooping down on Luxembourg’s tax arrangements with Amazon and Fiat. Of course, the EU is already ferreting around Apple in Ireland and the Dutch wing of Starbucks.

Officials believe that some tax breaks offered to big companies breach Europe’s rules on state aid, and basically is tantamount to an unfair subsidy which puts other companies at a massive disadvantage. This all follows the publication of a report by War On Want who reckon that McDonald’s siphoned off billions of euros of franchise sales from EU nations between 2009 and 2013.

The report said that McDonald’s coughed up €16m in tax, but, if the tax had been paid in the countries that the sales were made, then it is thought that Ronald McDonald would have to pay a total of €1.05bn in tax.

McDonald’s have outright rejected these allegations.

Apple facing £1.5bn tax avoidance bill?

April 30th, 2015 No Comments By Mof Gimmers

TAX MONKEYS Apple facing £1.5bn tax avoidance bill?Tax avoidance has been one of the hot topics this past couple of years, with a number of pop stars and businesses getting dragged over it all.

Gadget vendors Apple have been warned that they’re looking at a £1.5billion bill if they are found guilty of avoiding taxes across Europe. The tech behemoth is currently under investigation by authorities in the EU who, if they find Apple guilty, they have the power to rake all those unpaid taxes back in.

This week, Apple talked to investors about the scale of the potential repercussions. The amounts they could end up paying out ‘could be material’, which is a stock market term which translates to 5% of their average profits over the last three years. That should work out at over a billion quid, which is not to be sniffed at.

Apple’s deal with Ireland and taxes has been scrutinised for a while now.

In a statement to the stock exchange, Apple said: “If the European Commission were to conclude against Ireland, it could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid, and such amount could be material.”

Of course, Apple made £8.9billion in profit between January and March of this year, so they’re invariably not too worried about these looming tax penalties. They’ve probably got a couple of billion down the back of the sofa that’s fallen out of their jeans pocket.

European competition chiefs will release their report in June.


expensive plane 300x225 Do you need to reclaim APD on childrens flights?As announced in last year’s Autumn Statement, from this Friday, 1 May, Air Passenger Duty (APD) will be scrapped for children under 12. Interestingly, the removal of the charge applied to both new and existing economy-class bookings, meaning if you had already booked ahead, you may have already paid APD that actually isn’t due. Unfortunately, however, not every airline is automatically processing these refunds and you may have to do something to claim back the APD, which could be up to £97 per flight.

How much you could reclaim depends on when you booked at how far you are travelling. If you booked before 19 March 2014 , besides being a very organised person, you’ll probably get £13 for flights under 2,000 miles, £69 for flights between 2,001 and 4,000 miles, £85 for flights between 4,001 and 6,000 miles, and £97 for flights over 6,000 miles. Flights booked on or after 19 March 2014 will be due a refund of £13 for flights under 2,000 miles and £71 for longer flights

Note that APD is charged only on outgoing flights from the UK, not on inbound ones and strictly speaking, is charge paid by the airlines to HMRC, although generally the cost is included in the ‘fees and charges’ element of ticket prices. As a result, if you have paid APD for children for flights leaving on or after 1 May, they ought to refund the charge, with HMRC confirming there’s no deadline to reclaim the APD. The new waiver does not apply to non-economy flights, nor on tickets for children under 2 (as they don’t have to buy a seat, therefore pay no APD). Also note that the exemption is for children under 12, at the time of the flight, so if you paid APD last year for your 11 year old who is now 12, hard cheese.

But what if your airline isn’t doing automatic refunds? MoneysavingExpert have produced a handy table which tells you which airlines are offering automatic refunds and which are not, and what you need to do. In most cases it tends to be the cheaper airlines that aren’t offering automatic refunds, but you generally just need to complete some kind of claim form in order to get your APD back. Examples of airlines that do require a some kind of action include FlyBe, Jet2, WizzAir and everyone’s favourite Ryanair. However, note that Ryanair did actually stop charging children APD over a month ago in an uncharacteristic show of generosity, and that WizzAir are claiming that some of their fares were actually lower than the APD charge, and in those cases, refunds of APD will not be given. Which seems reasonable, if far-fetched.

Finally, make sure you keep an eye on the APD paid for older children if you’re booking flights beyond 1 March 2016, when the exemption will be extended to children under 16.

HMRC to scrap child benefit ‘loans’

April 13th, 2015 No Comments By Thewlis

child saving money 300x204 HMRC to scrap child benefit loansAlthough originally introduced as a universal benefit, child benefit became (partially) means-tested in 2012, being restricted for those families where one person earns £50,000 and scrapped completely if one partner earns £60,000 or more. However, to protect stay-at-home parents whose only income might be the child benefit payments, those ceasing to be entitled to the benefit could deal with it in two ways- disclaim it, or repay the excess amount claimed (which could be all of it) through the self-assessment system on a tax return.

However, because of the way the self-assessment system works, this meant that these high-earning parents were actually able to take advantage of an interest-free ‘loan’ from the taxman, by receiving payment of child benefit well in advance of the date of repayment. For example, child benefit paid between April 2012 and April 2013 would be due for repayment on the self-assessment deadline of 31 January 2014. In some cases, the underpayment could be collected via a change to the tax code in the following year, giving an even longer extension on the loan. In either case, the ‘loan’ from HMRC, which, for a family with two children amounts to over £1,700, could be interest free for over two years. Which is a great deal if you can get it.

But, it seems that someone at HM Revenue & Custom has realised this unforeseen benefit and they are now taking steps to address the issue. HMRC is now identifying affected parents and is making the relevant adjustments in the current year tax codes- which will take effect from this month- in order to claw back the child benefit that is not due at the same time as it is being paid out.

Normally, tax codes are used to collect underpaid or overpaid tax from a previous year, and allocates taxpayers with an personal allowance amount, less any deductions for things like overpaid child benefit. For example, a working age individual would normally have a standard tax code for 2015/16 of 1060L, which means that a payroll department will know that the first £10,600 of a person’s wages should be paid free of income tax.  For those still receiving child benefit even though they are not entitled, from this year onwards this code will be changed, assuming there are no other issues or deductions, to something close to 700L, so affected taxpayers will pay slightly more tax each month, at approximately the same pace as they receive their four-weekly child benefit payments.

Unfortunately it appears HMRC has not explained why they are changing codes, which could cause even more congestion on their phone lines, already filled with pension freedom day pensioners querying potential tax implications of withdrawals, from confused high-earning parents. Besides, given HMRC’s track record with spontaneously adjusting tax codes (or not), let’s hope they manage it a little better this time around.

beer 300x225 Cuts to alcohol duty are shameful and a total disgraceMost people will have been at least mildly pleased with last week’s Budget, with a number of small giveaways that will generally have a positive effect on the pocket. One group of announcements that most will have filed under positive news were those relating to sin taxes on beer, cider and spirits, which have been cut by 1p and 2% respectively. But apparently we’re all wrong, with the duty cuts being described as “shameful” and “a total disgrace”.

The Alcohol Health Alliance, which is comprised of medical bodies, charities and alcohol health campaigners, has come out in strict disapproval of the cuts, and the freeze on wine duty,  with Professor Sir Ian Gilmore, chair of the Alcohol Health Alliance, claiming the cuts were evidence that the chancellor had prioritised the interested of big business over public health.

“This decision is a slap in the face to our doctors, nurses and emergency services on the front line that are paying the price for this cut”, he said. “With over one million alcohol-related hospital attendances every year, our NHS simply cannot afford for alcohol to get cheaper.

“The government’s own figures show that alcohol-related harm costs the UK £21 billion every single year. With less than half of this recouped through current levels of taxation, to suggest lowering taxes even further is thoroughly shameful. These cuts also mean that cheap, strong alcohol that gets into the hands of our children will be even more affordable now,” he finished, not mincing his words.

Katherine Brown, director of the Institute of Alcohol Studies agreed, calling the decision to cut tax on cider and spirits at a time when the NHS is at “breaking point”  a “total disgrace”.

So why did the Chancellor do it? Is he hoping to woo beer drinkers in advance of May’s election? Possibly. However, the subject of alcohol duties has been a subject of sustained campaigning by the trade, specifically the Wine and Spirit Trade Association (WSTA) who welcomed the cuts to the “extremely high” rates of duty paid by UK drinkers. But as part of the Drop the Duty! Campaign, the arguments for a cut in alcohol duties are that cheaper prices will stimulate this area of the economy, and lead to greater prosperity and more jobs.

Independent analysis commissioned by the WSTA and carried out by Ernst Young showed that a 2% cut in duty would boost public finances by £1.5 billion. David Frost, chief executive of the Scotch Whisky Association (SWA) said the cuts send an “important signal on fair taxation” to the Scotch industry’s export markets; the SWA previously blamed the 5% decline of the UK market for Scotch whisky in 2014 on the country’s “excessive” levels of tax on spirits.

So what do you think? Will a penny saved in duty result in more alcohol-related NHS spending, or will it just mean our pockets are ever so slightly fuller after a night out?

2015 Budget roundup

March 18th, 2015 1 Comment By Thewlis

Budget box 1332 19856581 0 0 7059907 300 2015 Budget roundupIn a little over an hour, and filled with cheap jokes and tired soundbites (“Tax doesn’t have to be taxing”), George Osborne has finally divested himself of his sixth Budget. While he promised no gimmicks or giveaways, there were a few nuggets,  and a few surprises hidden away. So how will they affect your pocket?

First of all, the Chancellor announced the death of the tax return. For many people, including those with small businesses, the Chancellor reckons he’s going to scrap the return system for millions of people, replacing it with a new ‘digital account’ system that can be completed anytime. More details are awaited but this doesn’t sound at all like a technological car crash waiting to happen… Also, as widely predicted, the personal allowance will go up to £11,000, but not for a couple of years (2017/18). From April 2015, the tax-free amount will be £10,600 a year.

Other measures related to small business include changes to business rates and the news that Class 2 National Insurance contributions (currently £2.75 a week for the self employed) will be abolished during the next parliament. Assuming George is still in the chair, one supposes…

But the biggest news from the Budget is for savers. The ISA contribution limit, massively inflated last year, will go up to £15,240 in April, but under current rules, the contributions into ISAs are one-time only- so if you need to take some cash out for whatever reason, you cannot refill your ISA if you’ve used all your contribution, even where you have clearly taken the cash out of the ISA. Today, the Chancellor has announced a new ‘fully flexible’ ISA that will allow you to withdraw and reinvest in an ISA, provided the net amounts contributed do not exceed the limits.

And there’s even better news for first-time buyers. A new help-to-buy ISA will help people save up for a deposit for their first house, which will even benefit from Government contributions into the savings pot. For every £200 saved, the Government will put in £50, meaning for a £15,000 deposit, you will only need to save £12,000. The changes to pension rules previously announced will also be tweaked and added to, allowing 5 million existing pension holders to access an annuity without punitive tax charges, although they will need advice to ensure they aren’t ripped off by unscrupulous annuity buyers.

But the top news for savers is that the first £1,000 of interest earned (£500 for higher rate taxpayers) will now be totally tax free. This will take 95% of taxpayers out of tax on their savings, but this might be partly due to the fact that savers can’t earn much interest given the shockingly low rates.

Finally, duties on things you might spend your cash on- beer duty is down by 1p, and the duty on cider and spirits is down 2%. Wine duty and fuel duty is frozen.

2015 Budget predictions?

March 17th, 2015 No Comments By Thewlis

budgetcuts 200x300 2015 Budget predictions?George’s final Budget (of this parliament anyway, we can’t guarantee whether he’ll be here or not come May) will be delivered to the House tomorrow, and the grapevine is unusually light on rumours as to what surprises might pop out of that red box. However, the Chancellor himself has promised “no giveaways, no gimmicks” in this week’s Budget, but here are a few things we think we might see tomorrow, that might will improve your pocket’s prospects.

This time around,  falling inflation and lower interest rates mean payments on the national debt will be reduced, which could give the Chancellor room to provide a tax break for middle-income families- the OBR is widely expected to announce a £6bn cut in government borrowing for 2015-16. However, George has to balance the extra wriggle room he has available, with whether he wants to save the juicy stuff for election manifestos instead…

What he could do is raise the personal income tax allowance to  £11,000, a £500 increase on the previously announced £10,500 from this April.  People earning below that amount every year wouldn’t have to pay any income tax at all, and everyone else would save a little bit on their annual tax bill.

Other potential changes affecting individuals could see an increase in the inheritance tax nil rate band- bearing in mind earlier promises to get it to £1 million by 2020, which would be good news for all those owning property in London and the South East. However, on the flip side, it has been suggested that the Chancellor might look to raise cash by announcing the withdrawal of private residence relief on houses worth more than £2 million.  Under current rules, UK residents don’t pay capital gains tax when selling their home, but it could be limited to provide relief only on where proceeds are under £2m. This would also take the wind out of Labour’s mansion tax sails in an election campaign face off.

Finally, to help low-paid workers, George could raise the level at which National Insurance contributions kick in. This would help lower earners, as this has become a bigger issue for low earners than their income tax while the NI threshold remains so much further behind the income tax personal allowance.