By Lyndsey Hall
Yesterday, George Osborne announced the first Budget to a majority Conservative government in almost twenty years. Expectations were high, and many of them were rewarded, but as the Chancellor said during his speech, some “difficult decisions” have to be made.
Osborne announced that this is “a Budget for working people…a big Budget for a country with big ambitions”.
Here is a summary of the key points from yesterday’s Budget take two:
Personal Taxation
- A new National Living Wage will be introduced for over 25s, starting in April 2016 at £7.20 and increasing to £9 by 2020
- Personal Allowance to rise to £11,000 in 2016
- Higher rate income tax threshold to rise to £43,000 next year
Welfare
- Income threshold for tax credits will decrease from £6,420 to £3,850
- Working-age benefits frozen for four years
- Includes tax credits and local housing allowance, but excludes maternity pay and disability allowance
- Tax credits and Universal credit restricted to two children from April 2017 (unless third child is result of multiple birth)
- Disability benefits will not be taxed or means-tested
- Benefit cap reduced from £26,000 to £23,000 in London and £20,000 in the rest of the country
Housing
- Mortgage interest relief for buy-to-let homebuyers restricted to basic rate of income tax
- Rents in social housing sector will be reduced by 1% a year for the next four years
- Subsidies for social housing phased out
- Local authority and housing association tenants in England who earn more than £30,000 (£40,000 in London) will pay up to the market rent
- 18-21 year olds will lose their automatic entitlement to housing benefit
- A new Family Home Allowance of £175,000 will mean that the Inheritance Tax threshold increases to £1million in 2020-21 for surviving spouses and civil partners
Pensions
- State pension triple lock protected (annual increase will be highest of earnings growth, inflation or 2.5%)
- Annual Tax relief on pension contributions limited to £10,000 a year
Education
- Maintenance grants for students scrapped and converted to loans from 2016/17
- 18-21 year olds must “earn or learn”
Business
- Corporation tax cut to 18% by 2020
- Tax-free threshold on dividends set at £5,000 from April 2016
- Rates of dividend tax set at 7.5%, 32.5% and 38.1%
- Employment allowance increased from £2,000 to £3,000 from April 2016
- Small firms’ will be able to hire four staff on the National Living Wage without paying National Insurance
- Annual investment allowance will be permanently fixed at £200,000 from January 2016
- IR35 to be reformed
- 3 million new apprenticeships will be created by 2020
Transport
- Fuel Duties frozen for rest of 2015
- New cars and motorbikes will not need MOTs for the first four years, up from three
- £30million of funding for Transport for the North
- Road Tax will be reformed, with a flat rate of £140 for most new cars after the first year
Entertainment
- Cost of funding free TV licences for over 75s will be absorbed by BBC between 2018 and 2021
Public Sector
- Pay awards will be capped at 1% for next four years
Non-Doms
- Non-dom status will be abolished for those who have been in the UK for more than 15 of the last 20 years
Osborne announced that the UK economy is “fundamentally stronger than it was five years ago”, although the growth forecast for this year has decreased to 2.4% and the date by which public finances will move into surplus has been pushed back to 2019/20.
What are your thoughts on the Chancellor’s Summer Budget 2015? Were there any surprises in the announcements? Let us know in the comments, or join the conversation on Facebook and Twitter.
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