Budget 2015: winners and losers
George Osborne's sixth budget was reasonably muted, with none of the shock value of last year's announcements on pensions. That said, there will be many winners and losers from the many policies and consultations he revealed.
Here's our rundown of who benefited the most from the 2015 Budget – and who lost out.
With many families struggling to get onto the property ladder due to sky-high deposits, the Chancellor's Help to Buy Isa will help potential buyers put money aside for a future home.
The maximum amount that can be saved into the Isa will be £12,000 and the government will then top this up by a further £3,000 (or £50 for every £200 saved). It will apply to each person, so a couple will be able to get up to £6,000 towards the purchase price of their dream home.
Cash Isas will become fully-flexible from the autumn, with tax-free withdrawals allowed, while the new personal savings allowance will see the first £1,000 of interest you earn on savings be exempt from tax (falling to £500 for higher-rate taxpayers).
The five million pensioners already locked into an annuity (often at bitterly disappointing rates) might be pleased at Osborne's confirmation that the government is launching a consultation into allowing people to cash in their annuities in return for a lump sum, from April 2016. This would give retirees the same freedoms as prospective retirees will have over their pension income from this April.
A penny off a pint for the third consecutive year, duty cut by 2% on spirits and cider, while duty on wine has been frozen - what's not to like?
The fuel duty increase, which was set to take place in September, has been cancelled, making ti five years in a row drivers have faced no fuel duty increase.
It was confirmed that the National Minimum Wage will be increasing by 20p to £6.70 an hour from October, while apprentices' wage will also rise by 20% to £3.30 an hour. Moreover, the personal allowance has been raised to £10,600 from April.
Individuals and small businesses both face a lot less red tape after the government announced it would abolish the current annual tax return system in favour of an ongoing digital tax return. Joy for people who have to file self-assessment tax returns.
The government announced little to help the average family (although low-earners will benefit from the raised personal allowance).
Osborne failed to tweak the Tories' much-maligned child benefit rule whereby, currently, if either one of a married couple earns over £50,000 they have to start repaying their child benefit – whereas if both earn £49,999 they are entitled to keep all of it. Changing this rule could have won Osborne the family vote in May's election.
Also, the chancellor did nothing to help families facing an inheritance tax (IHT) bill, as some people had hoped. He could have raised the threshold at which you begin paying IHT (at 40%) from its current £325,000. However, there remains speculation Osborne will make an announcement on this closer to the election to secure last-minute votes.
People who have been using 'deeds of variation' to avoid paying IHT will face a probe. The government will also close loopholes to make sure that Entrepreneurs Relief is only available to those selling genuine stakes in businesses and will issue more accelerated payments notices to those who owe tax.
Wealthy pension savers
People who can afford to max-out their pension will have been disappointed at the news that the lifetime allowance (the maximum you can contribute, while retaining tax benefits, to a pension) is being cut from £1.25 million to £1 million.
People reliant on benefits
While the chancellor said the squeeze in public spending will end a year earlier than he expected, it remains the case that there are still cuts in services (and no doubt benefits) to come.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.