Summer Budget 2015: Round-up
Chancellor George Osborne delivered his post-election 'blue' Budget on 8 July 2015. Here you'll find all the key points from his speech, which lasted well over an hour and was notable for welfare cuts, reduced tax relief for buy-to-let landlords, inheritance tax changes and the introduction of a new compulsory National Living Wage.
“The British economy I report on today is fundamentally stronger than it was five years ago. We’re growing faster than any other major advanced economy. Our businesses have created two million more jobs. Living standards are rising strongly. Our long-term economic plan is working.”
"You only have to look at the crisis unfolding in Greece as I speak, to realise that if a country’s not in control of its borrowing, the borrowing takes control of the country."
"This is a Budget for working people, that sets out a plan for Britain for the next five years, [building towards] a higher wage, lower tax, lower welfare country."
"The greatest mistake this country could make is to believe all our problems have been solved."This is a one-nation government that does the best thing for the economy and the right thing for the country."
"This is a big Budget for a country with big ambitions."
“We should always fix the roof while the sun is shining.”
"Britain deserves a pay rise and Britain is getting a pay rise."
- OBR forecast report for economic growth in 2015 is 2.4% - strongest of any major advanced economy in the world – then 2.3% in 2015 and 2.4% the year after.
- Deficit to be cut at the same pace as last Parliament. It was 10.2% of GDP in 2010. In 2015-16 it is forecast to be 3.7%, then: 2016-17, 2.2%; 2017-18, 1.2%; 2018-19, 0.3%; 2019-20, +0.4%; 2010-21, +0.5%.
- OBR forecasts 1 million more jobs over next five years, but the government wants to create 2 million more jobs.
- Public sector pay rises of 1% a year for the next four years.
- National, compulsory living wage of £7.20, rising to £9 an hour by 2020.
- NHS to receive a further £8 billion by 2020 on top of the £2 billion received this year.
- Will boost HMRC’s capacity with a £0.75 billion investment, to help raise £7.2 billion in extra tax.
- Abolition of permanent non-domicile status by April 2017 so that non-doms pay same tax rate as everyone else, raising £1.5 billion in tax revenues.
- A £175,000 inheritance tax allowance for your home when left to children or grandchildren, transferable to spouse. It means you can pass on £1 million to descendants free of tax.
- Corporation tax rate cut to 19% from 20%.
- Charges cap on claims management firms.
- New Vehicle Excise Duty (VED) bands for new cars from 2017, set by emissions, to fund a new roads fund.
- Fuel Duty to remain frozen this year.
- From 2016-17 academic year, Student Maintenance Grants to be replaced by new loans to be repaid when recipients earn £21,000 a year.
- Consultation on freezing loan repayment threshold at £21,000 for five years.
- From April 2017, mortgage interest tax relief on buy-to-let property will be restricted to the basic rate of tax, but to be phased in.
- Tax credits on dividends to be replaced by a new £5,000 annual dividend allowance. It means 15% of people who earn (or pay themselves) dividends will pay more in tax.
- WelfareFree TV licences for the over-75s to be funded by BBC.
- Disability benefits to free of tax and not means-tested.
- From Sept 2017, all working parents will receive free childcare of up to 30 hours a week for three- and four-year-olds.
- New youth obligation to work scheme introduced for 18 to 21-year-olds.
- Employment and Support Allowance reduced for some claimants.
- Working-age benefits frozen for four years.
- Rents in the social housing sector to be reduced by 1% a year for four years.
- Benefits cap reduced from £26,000 to £20,000 (£23,000 in London).
- Families with three or more children to receive no more tax credit support.
- Personal allowance to rise from £10,600 to £11,000 next year.
- Higher rate threshold moves to £43,000 next year.
- Green paper to review pensions tax relief and taxation on income.
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.
The total money value of all the finished goods and services produced in an economy in one year. It includes all consumer and government consumption, government spending and borrowing, investments and exports (minus imports) and is taken as a guide to a nation’s economic health and financial well being. However, some economists feel GDP is inaccurate because it fails to measure the changes in a nation's standard of living, unpaid labour, savings and inflationary price changes (such as housing booms and stockmarket increases).
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.