We know it’s a long and complicated piece of paperwork, so we’ve distilled this summers budget down into simple key points that might be relevant to you in order to give you all the information you need. Remember, the H-J Wealth team are available to answer any questions and assist you if you think these changes are going to affect you in the future.
Income Tax and Pay
- A national living wage is to be introduced for workers over the age of 25. Starting at £7.20 an hour from April 2016, the plan is for this to rise to £9 an hour by 2020.
- The inheritance tax threshold is to increase to £1million, to be gradually introduced from 2017 and will be underpinned by a new £325,000 family home allowance. Click here for more information on how this will affect you and your family.
- Your personal tax allowance (the amount you start to pay tax) will rise to £11,000.
- The point that people pay income tax at the 40p rate will rise to £43,000. Click here for more information if you are a high earner.
- The mortgage interest relief for buy-to-let homebuyers to be restricted to the basic rate of income tax.
Pensions and Welfare
- From April 2017, Tax Credits and Universal Credits will be limited to two children.
- Income threshold for Tax Credits will be reduced to £3850.
- Working age benefits will be frozen.
- Social housing sector rents will be reduced by 1%.
- Disability benefits will not be taxed or means tested.
- The yearly household benefit cap will be reduced to £20,000 and £23,000 in London.
- The tax-free amount that people will be able to contribute to their pensions will be reduced for those with incomes of £150,000. Click here for more information.
Improving and Stabilising the Economy
- One million extra jobs to be planned by 2020
- The economy grew by 3% in 2014
The Deficit and Public Spending
- Borrowing set to fall from £69.5bn to £43.1bn, £24.3bn and £6.4bn before reaching a planned £10bn surplus in 2019-20
- A 1% public sector payrise will continue for the next four years
- £37bn of further spending cuts are planned to take place by 2020, including £12bn worth of welfare cuts, £5bn from tax avoidance and a £20bn reduction in departmental budgets.
Fuel and Road costs
- Fuel rates will continue to be frozen
- There will be a major reform to vehicle excise duties*
- There will be a new apprenticeship levy for large employers in order to fund the government target of creating 3 million apprenticeship starts by 2020.
- The Climate Change Levy exemption for renewable electricity is to be cancelled.
- From 2016, the National Insurance employment allowance for small firms will increase by 50% to £3,000.
- The dividend tax credit will be replaced by a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax will be set at 7.5%, 32.5% and 38.1%.
- The annual investment allowance will be fixed permanently at £200,000 from January 2016.
- Corporation tax will be reduced to 19% in 2017 and 18% in 2020.
- From April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay the same amount of tax as other UK citizens, raising an estimated £1.5bn.
- £7.2bn will be raised from a clampdown on tax avoidance and tax evasion.
- The bank levy rate will be reduced over the next six years and 2016 will see the introduction of a new 8% surcharge on bank profits.
- From November, there will be a cap on charges imposed by claims management companies as well as an increase in insurance premium tax.
- There will be a consultation on Sunday trading laws.
If you have concerns about how any of the above will affect your business then we can help. Click here to contact the HJ Wealth team.
The Defence budget
- The government will spend 2% of GDP on defence every year. This will rise in real terms (0.5% above inflation) every year.
- There will be a new £1.5bn Joint Security Fund in order to invest in intelligence and military agencies.
- Those who receive or have received the Victoria Cross and George Cross will see their annual pension annuities rise to £10,000. The government will also fund a memorial to victims of terrorism overseas.
Health and Education
- By 2020, the NHS is to receive a further £8bn in addition to the £2bn already announced.
- From 2016, student maintenance grants are to be replaced with loans and must be paid back once people earn more than £21,000 a year. This maintenance loan will increase to £8,200.
If you need financial advice, pension advice or are worried about how any of this years budget will affect you then why not arrange a financial review with our team? Click here for more information.