As the end of the current parliament approaches and the general election becomes the nation’s talking point, Chancellor George Osborne had a final chance to please the electorate in yesterday’s budget speech to the Coalition Government.
Osborne highlighted key areas he considered relevant to the economy, as a result of this Government’s changes. These included:
- Growth in 2015 will be 2.5%, which is higher than the 2.1% predicted a year ago
- Debt as a percentage of GDP will fall in 2015-16 for the first time since 2001
- As a percentage of GDP, the deficit will be 5% this fiscal year
- Unemployment has fallen under the coalition government, from 8% to the current rate of 5.7%
In summary, whilst Osborne had limited room for manoeuvre, and having made budget speeches previously reforming pensions and stamp duty, there were some announcements worth noting. In summary:
- Personal allowance – due to rise from £10,000 to £10,600 from April this year, and £11,000 the year after. To be passed onto higher rate taxpayers too and overall will represent a tax cut for 27 million people.
- Self-Assessment – Osborne scrapped annual tax returns in favour of digital records like online bank accounts that will keep an up to date record of the amount of tax you owe
- A fully flexible ISA – people will have complete freedom to take money out and put it back in to their ISA without losing their tax entitlement
- Help to Buy ISA’s – first time buyers get help from the Government to save for a deposit on a house, for every £200 you put in to the ISA, the Government will put in £50
- Tax free savings – basic rate taxpayers will be able to combat low returns on cash savings thanks to a £1000 tax free allowance on any returns on savings held outside of an ISA. Higher rate tax payers will benefit too but from a reduced allowance of £500.
- Pension’s allowances – the lifetime pensions allowance reduced to £1million from £1.25million from next year. No change to the annual allowance
- Tax Evasion – further action against aggressive tax planning vehicles
- Corporation Tax – cut to 20% from next year, and simplified to cut relief on foreign branches
- Motorists – fuel duty frozen for another year
If you would like assistance in understanding what this means for you get in touch with us today on 0207 164 2116 to speak with one of our experts.