2015 Budget roundup
In 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.