On 18 March, George Osborne, Chancellor of the Exchequer, announced the budget for the 2015/16 financial year and beyond. This is a budget directed at savers, pensioners and continuing the national recovery.
State of the economy
- UK is the fastest-growing major economy with a 2.6% growth rate in 2014.
- 2.4% growth forecast for 2015 followed by 2.3%, 2.3%, 2.3% and 2.4% over the following four years up until 2019.
- Unemployment is set to fall to 5.3% in 2015.
- Inflation predicted to be 0.2% in 2015; the target is still 2% CPI. Inflation is now at its lowest rate in half a century.
- From March 2015, the duty rates on beer, spirits and lower-strength cider, will be reduced by 2% and frozen on wine.
- The fuel duty increase will be cancelled.
- Ultra-fast broadband should be available to nearly all UK homes and businesses.
Personal and business taxation
- Personal tax allowance to increase to £10,600 from April 2015, £10,800 from 2016, and £11,000 from 2017.
- The first £1,000 of all savings will be tax-free, and the first £500 for higher-rate tax payers.
- Higher-rate 40% tax threshold rises from £41,865 to £42,385 from April 2015 and £43,300 by 2017/18.
- Class 2 National Insurance will be abolished for the self-employed.
- National Minimum Wage will increase by 20p in October 2015 from £6.50 to £6.70.
- Annual tax return to be abolished; instead information will be uploaded online into “digital tax accounts” from 2016/17.
- The main rate of Corporation Tax will drop to 20% for all businesses.
- Small business rate relief to be reviewed.
- Cap on Gift Aid extended from £5,000 to £8,000.
- The government will no longer allow businesses to take account of foreign branches when calculating how much VAT on overhead costs they can reclaim in the UK.
- The government will continue to support zero-emission vans to 5 April 2020.
Savings, investments and pensions
- The Individual Savings Account (ISA) threshold increases from £15,000 to £15,240. Individuals will also be able to withdraw their money and re-bank it within the same year without losing their ISA tax benefits.
- “Help To Buy” ISA on the way: “For every £200 you save for your deposit, the government will top it up with £50 more.”
- From next year, the lifetime pension allowance will be cut from £1.25 million to £1 million, limiting large pension pots. Fewer than 4% of pension savers currently approaching retirement will be affected.
- From 1 April 2015, the VAT registration threshold will be increased from £81,000 to £82,000.
- A new £90,000 charge for non-domiciled persons resident in the UK for 17 of the past 20 years will be introduced. The charge for 12 of the last 14 years will be increased from £50,000 to £60,000.
- From 6 April 2015, Capital Gains Tax will be payable in the UK for non-resident property owners.
- New rules to target Inheritance Tax avoidance through the use of multiple trusts.
- From 1 April 2015, charges will apply on residential properties owned through a company and worth more than £2 million.
- The government will address Entrepreneurs’ Relief rules for tax planning by targeting structures so that people with only a small indirect stake in a trading company can benefit from the relief.