It is usually fairly straightforward to work out who has won and lost following a Budget.
George Osborne’s first Budget since the election was so wide ranging, with hugely complex announcements, fully understanding who is better and worse off will take some time to work through.
However, here are our early thoughts.
The low paid
The big rabbit from the hat was the introduction of the National Living Wage, which, for people over the age of 25 will see their hourly rate go from £6.50 to £7.20 per hour and ultimately £9.
Of course some of the gains from the National Living Wage will be offset by cuts in welfare and state benefits.
Income Tax payers
The Personal Allowance, which is the amount you can earn before you start to pay tax, will be increased to £11,000 from 6th April 2016, with an increase to the basic rate tax band.
Corporation tax will be reduced from 20% to 19% and then 18% over the next two years.
Good news of course, but for some businesses this will be swallowed up by the cost of paying the National Living Wage.
Children of rich parents
The new £175,000 Inheritance Tax allowance, to be used against the family home, will help to reduce the amount of tax paid by people on death.
Recipients of state benefits / welfare
Everyone knew that with £12 billion needed to be cut from the welfare bill those people in receipt of such benefits would, in all likelihood, be worse off after the Budget.
George Osborne announced a raft of measures, including a cut in the overall cap on benefits a family could receive, which will take time to work through.
However, it is clear that recipients of state benefits and welfare will indeed be worse off as a result of today’s Budget.
Public sector workers
With the exception (we assume of workers entitled to the new National Living Wage) the public sector will see wage rises capped at just 1% per year for the next four years.
Once the rate of inflation starts to rise again this will mean millions of workers face real terms pay cuts.
Although there will be little sympathy, the life of a non-dom is about to get more expensive with a clamp down on the status by the Government which is expected to raise £1.5 billion.
Buy to Let investors
Buy to let investors have been able to offset the interest cost of mortgages against the rental income they receive.
From April 2016 the amount they will be able to claim will be capped at the level of basic rate tax.
Many business owners pay part of their income in the form of dividends.
From April 2016 the tax payable on dividends will be increased, with the dividend tax credit replaced with a £5,000 tax-free allowance and the balance taxed at a rate of 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.10% for additional rate taxpayers.
Maintenance grants, which are available to poorer students, will be replaced by loans from 2016/17; students who qualify will be able to borrow up to £8,200 per year.
The loans will not become repayable until the student earns more than £21,000 per year.
Were you a winner or a loser?
We’d love to hear what you think about the Budget, were you a winner or a loser?
Why not leave us a comment below?
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