Despite the leaks, today’s Budget saw George Osborne pulling plenty of rabbits out of his hat, which will be of particular interest to first time buyers and savers.
In his final Budget Mr Osborne was in bullish mood, reminding those listening of the successes of the Government, whilst announcing further measures which will affect the personal finances millions of people.
Read on as we outline the main changes.
The economy & Government finances
Tradition dictates that the Chancellor outlines the main economic numbers early in his speech and this year was no different.
Mr Osborne reported that the Office for Budgetary Responsibility (OBR) currently predicts that the UK economy will grow by 2.6% in 2015; despite the problems in the Eurozone and the effects of the falling oil price.
In 2015 GDP is forecast to grow at 2.5%, before falling back to 2.3% in 2016 and 2017.
The Chancellor then went on to report that living standards are now higher than in 2010, at the start of this parliament and that the average family is now £900 per year better off.
According to Mr Osborne unemployment will fall from 5.7% now to 5.3% by the end of 2015, far lower than the previous OBR forecast of 6.5%.
As the general election looms large, the major parties disagree on the level of cuts which will be needed. Mr Osborne revealed that a total of £30 billion of savings would need to be found; much lower than the £70 billion figure widely reported.
According to the Chancellor £13 billion of the cuts will come from government departments, £12 billion from the welfare budget and £5 billion from clamping down on tax avoidance and evasion.
Making the announcement, Mr Osborne said: “We have done it in this Parliament; we can do it in the next.”
The Personal Allowance, which is the amount every individual can earn before the start to pay tax, will rise to £10,800 in the 2015/16 tax year and then £11,000 in the following year.
According the Mr Osborne 27 million will benefit.
The level at which people start to pay higher rate tax will also rise from £42,385 to £43,300 in 2017/2018.
Many of the changes have been widely trailed before the Budget.
As expected the Lifetime Allowance (LTA), which is the maximum amount an individual can hold in a pension pot before taxes are charged, will be cut from £1.25 million to £1 million.
According to the Chancellor this will raise £600 million, but affect only 4% of pension savers.
However, from 2018 the LTA will be index linked.
The 2015 Budget saw big changes to ISAs, followed up by further enhancements in the Autumn Statement.
Mr Osborne announced further changes today, which will allow savers to withdraw money from their ISA and repay it later on in the same tax-year without losing the tax-free status; something which is not currently possible.
In a shock move the Chancellor announced a new ‘Help to Buy ISA’, which will see the Government add £50 to every £200 saved by first time buyers. George Osborne said:“We’ll work hand in hand to help you buy your first home.”
The scheme, which is designed to work hand in hand with the Government’s starter homes programme, will see first time buyers who save £12,000 get an additional £3,000 boost from the Government.
In a move which will please savers, it was announced that the first £1,000 on interest received each year will be tax-free.
According to the Chancellor this means that 95% of taxpayers will no longer pay any tax whatsoever on the interest they receive.
From 2016 millions of people who have already bought an Annuity with their pension pot will be able to trade in their income for a lump sum.
Yet another area that attracted much speculation before the Budget, but the news was not as radical as many had hoped for.
Possibly with one eye on the affairs of Ed Milliband, Mr Osborne announced a review into ‘deeds of variation’, which are commonly used after someone has died to change their will with the aim of reducing Inheritance Tax.
Class Two National Insurance contributions, paid by the self-employed, will be scrapped.
The annual paper tax return, now completed by millions of people will be scrapped.
Mr Osborne said: “We believe people should be working for themselves, not for the taxman. Tax doesn’t have to be taxing.”
The Chancellor announced that £13 billion of assets held by the Government after bailing out Northern Rock and Bradford & Bingley will be sold. Whilst a further £9 billion will be raised from the sale of shares in Lloyds.
The money raised from both will be used to repay the national debt.
In a further move Mr Osborne announced that the bank levy will be increased by 0.21% raising a further £900 million.
Petrol & transport
The fuel duty rise set for September will be cancelled.
According to Mr Osborne this creates the longest freeze in duty for over 20 years.
Fags & booze!
The tax on a pint of beer will be cut by 1p.
Duty on cider, whiskey and other spirits will be reduced by 2%, although the tax on wine will remain unchanged.
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