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!
If you need help with getting your head around the figures, or perhaps interested in making the move the cloud with Xero – get in touch for a chat. Catch us on the phone 01858 289189 or drop us an email firstname.lastname@example.org
Thanks for reading,