Yesterday the Chancellor George Osborne delivered his final budget before the General Election in May which, depending on your current personal position and political preferences, is either a welcome continuation of UK economic recovery on the road to future prosperity or another nail in the coffin of the Coalition and future austerity.
Directly affecting the Greater Manchester area, the Chancellor announced that he intends to allow Greater Manchester to keep 100 per cent of the additional growth in local business rates as we build up the Northern Powerhouse.
However, as Marketing Stockport is a business with no political allegiance, here is a summary of the main highlights in order that you can make up your own mind:
Personal Savings – a new personal savings allowance
- New Personal Savings Allowance will allow up to £1,000 of a basic rate taxpayer’s savings income and up to £500 of a higher rate taxpayer’s savings income, to be tax free each year.
- ISAs
Individual Savings Accounts (ISAs) – savers will be able to withdraw and replace money from their cash ISA.
First Time Buyers – help to buy up to £3,000
Help to buy ISA – the Government will give a 25% bonus payment for first time buyers, contributing £50 for every £200 put in, up to a total bonus of £3,000.
Personal Allowance Tax – increase in personal allowance
2016/17: Personal Tax Allowance will increase from £10,600 to £10,800
2017/18: Promise of an increase in Personal Tax Allowance to £11,000
Higher Rate Income Tax – increase in the threshold
40% – the threshold for tax payers in the 40% rate band will increase from £31,785 to £31,900.
45% – the top rate 45% band remains at £150,000.
Pensions – drop in lifetime contribution allowance
Lifetime contribution allowance – from April 2016 this will drop from £1.2m to £1m but will rise in line with the CPI (Consumer Price Index) from 06 April 2018.
Annual contribution allowance – this will remain at £40,000.
Pension annuities – from April 2016, pension annuities may be exchanged for a lump sum or alternative retirement product.
National Insurance Contributions – abolishing Class 2 contributions?
Class 2 NICs – it is the government’s intention to abolish Class 2 NICs if it is office in the next parliament
Class 4 NICs – the government intends to reform these if it is in office in the next parliament
Under 21’s Employers NICs – these are to be abolished from next month, April 2015
Young Apprentices NICs – to be abolished from April 2016
Self-employed – self-employed tax payers will no longer pay Class 2 National Insurance Contributions
Excise Duties – 1p off a pint!
Alcohol Duty: cuts effective from 23 March 2015:
Beer – duty cut, 1p off the price of a pint.
Cider – duty cut by 2%
Scotch whisky and other spirits – duty to be cut by 2%
Wine – duty is frozen.
Tobacco Duty: from 6pm 18 March:
Tobacco duty rates are increased by 2%.
National Minimum Wage – an increase of 20p
National Minimum Wage – this will rise by 20p an hour to £6.70 from October 2015.
Petroleum Revenue – tax reduction
Petroleum Revenue Tax – this is reduced from 50% to 35% and the supplementary charge is reduced from 30% to 20% to encourage investment into the North Sea Oil Industry.
VAT – small change
Registration increase £81,000 to £82,000
De-registration limits from £79,000 to £80,000
Local financier David Wherrit welcomes the Chancellor’s changes to taxation on savings:
“For those of us not fortunate enough to have had a basic financial education, taxing us twice on the same amount of money would not seem fair. For example, those of us that pay 20% tax on our income and then put some of our income into a savings account, may or may not have noticed that the interest paid is effectively taxed again at 20% i.e. “double-taxation.
“Thanks to George Osborne in today’s budget who has virtually eliminated the lower end of savings tax.”