Today Chancellor George Osborne delivered the first Budget under a majority Conservative government since November 1996.
In this Summer Budget Mr Osborne say’s Britain’s economy is growing faster than any other G7 nation and used the budget to unveil a new living wage, cuts to tax credits and committed Britain to spending 2% of national income on defence.
George Osborne delivering the Summer Budget, 8th July 2015
“Britain deserves a pay rise and is getting a pay rise,” George Osborne says. The Chancellor says a “fractional” effect on jobs is expected and the National Insurance contribution cut will help small firms.
Osborne stated that the Economy grew by 3% in 2014 with a 2.4% growth forecast in 2015, 0.1% lower than predicted in March, followed by 2.3% and 2.4% in the two following years. This means he has predicts 1 Million extra jobs will be created by 2020.
We’ve covered some of the main points of today’s announcement below, particularly those affecting businesses.
– Introduction of a new national living wage for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020 – giving an estimated 2.5 million people an average £5,000 rise over five years
– Low Pay Commission to advice on future changes to rate
– Personal allowance, at which people start paying tax, to rise to £11,000 next year.
– Plans to raise the personal allowance to £12,500 by 2020, so that people working 30 hours a week on the minimum wage do not pay income tax
– The point at which people start paying income tax at 40p to rise from £42,385 to £43,000 next year
Welfare & Pensions
– Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017.
– Income threshold for tax credits to be reduced from £6,420 to £3,850
-Working-age benefits to be frozen for four years – including tax credits and local housing allowance, but maternity pay and disability benefits exempted
– Green Paper published on proposals for “a radical change” to pension saving system
– Annual tax relief on pension contributions to be limited to £10,000 a year. The amount people can contribute to their pension tax-free to be reduced for individuals with incomes over £150,000, including pension contributions.
– Corporation tax to be cut to 19% in 2017 and 18% in 2020
– Permanent non-dom status to be abolished – from April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens.
– £7.2bn to be raised from clampdown on tax avoidance and tax evasion with HMRC budget increased by £750m
– Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5% from November
– New apprenticeship levy for large employers
– Climate Change Levy exemption for renewable electricity to be removed.
– National Insurance employment allowance for small firms to be increased by 50% to £3,000 from 2016
– Dividend tax credit to be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax to be set at 7.5%, 32.5% and 38.1%
– A consultation will take place on changing Sunday trading laws
Finally, you’ll be pleased to hear that there will be no rise in fuel duty, with rates continuing to be frozen!
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Thanks for reading,