Budget 2015: Summary of The Budget.

The Chancellor has presented his Budget to Parliament – here’s a summary of what was announced.

1. The UK had the fastest growth in the G7 in 2014

The UK economy had the fastest annual growth among G7 economies in 2014, and the strongest annual growth since 2007. At the end of 2014, employment had reached its highest ever level, unemployment has been falling in every region across the UK, and inflation is at a record low.

But risks still remain and there is still more to do to support businesses and boost productivity.

 

2. Debt will be falling as a share of GDP in 2015-16

Debt will be falling as a share of GDP from 2015-16. This is a year earlier than forecast at Autumn Statement.

By 2014-15, the deficit is forecast to have fallen by half, from 10.2% at its peak in 2009-10, to 5% in 2014-15.

In 2018-19, the government will have a surplus (will raise more in taxes than is being spent) of £5.2 billion.

 

3. The tax-free personal allowance is being increased in April 2017, to £11,000

To make work pay and ensure families keep more of the money they earn, the tax-free personal allowance – the amount people earn before they have to start paying tax – will rise to £10,800 in 2016-17, and £11,000 the year after.

The increases to the personal allowance from £6475 in 2010, to £11,000 in 2017-18 will save a typical taxpayer £905.

To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the government will also increase above inflation the point above at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18 – taking it to £43,300 in 2017-18.

 

4. A new Personal Savings Allowance will take 95% of taxpayers out of savings tax altogether

From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings.

If they are a basic rate taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 tax-free savings allowance.

If they are a higher rate taxpayer and earn from £42,701 to £150,000, they’ll be eligible for a £500 tax-free savings allowance.

5. Introducing the Help to Buy ISA – every £200 people save towards their first home, the government will put in an extra £50, up to a maximum bonus of £3000

The government has already helped people to buy a home with Help to Buy, which allows people to purchase a home with just a 5% deposit.

The government is now going further. To help first time buyers save for a deposit, it is introducing a Help to Buy ISA.

People will be able to open an ISA, save up to £200 a month towards their first home, and the government will boost it by 25%. That’s a £50 bonus for every £200 people save, up to £3000.

6. People will have complete freedom to take money out of an ISA and put it back in later in the year

ISAs are being reformed so that instead of being able to put up to £15,240 in the 2015-16 tax year into an ISA in total, people can take out their money and put it back in within the same year, without losing their ISA tax benefits – as long as the repayment is made in the same financial year as the withdrawal.

 

7. £1.25 billion for children’s’ mental health services

An extra £1.25 billion will be spent on mental health services for children and new mums – helping more than 110,000 people.

 

8. Cancelling the fuel duty increase scheduled for September

Fuel duty will be frozen again; since 2011, the government has cut and frozen fuel duty, saving a typical motorist a total of £675 by the end of 2015-16.

By the end of 2015-16 fuel duty will have been frozen for five years, resulting in the longest duty freeze in over 20 years.

 

9. Cutting beer duty for the third year in a row

There will be another penny off a pint, a 2% cut for spirits and most ciders, and a freeze on duty on wine.

 

10. Up to five million pensioners will be given the freedom to sell their annuity for a cash lump sum

From April 2016, people who already have an annuity will be able to now effectively sell it on, so that they too can benefit from the pension freedoms announced at last year’s Budget.

Currently, people who have bought an annuity are unable to sell it without having to pay at least 55% tax on it. From April 2016, the tax rules will change so that people who already have income from an annuity can sell that when they choose and will pay their usual rate of tax they pay on income, instead of 55%.

11. Charities will be able to claim more gift aid on small donations

The amount of small donations charities can get an extra 25% top up payment on in gift aid without needing any paperwork is increasing from £5,000 to £8,000 a year.

The government expects 6,500 charities to claim in full the higher new cash boost of £2,000 a year – nearly double the current amount.

12. Farmers will have more time to average their profits for income tax

This extends the period from two to five years, and will give farmers additional security as they typically have volatile profits due to uncontrollable factors such as the weather.

13. We will abolish the annual tax return

Millions of individuals will have the information HMRC needs automatically uploaded into new digital tax accounts. Businesses will feel like they are paying a simple, single business tax – and again, for most, the information needed will be automatically received.

14. Support for all regions across the UK

Working with Transport for the North, the government will look at rolling out better roads, quicker journeys and improved rail connections between the major cities of the north, as part of the government’s plan to build a Northern powerhouse.

The government is also giving even more powers to local areas, with a new devolution deal for things like transport, business support and skills for West Yorkshire, and more planning powers for London.

Ten Enterprise Zones across the country are also being supported to go further to create growth and jobs.

The government is also working on a Cardiff city deal and opening negotiations on the Swansea Bay Tidal Lagoon.

15. Making sure banks pay their fair share

The government is increasing the rate of the bank levy (one of the taxes that banks pay) from 1 April 2015.

This will raise an additional £900 million a year.

16. Increased support for the oil and gas sector

The oil and gas sector provides highly-skilled jobs, energy security and makes a significant contribution to the UK economy.

To encourage further investment in the North Sea, the government will introduce a new Investment Allowance and reduce the supplementary tax charge on oil and gas companies further, from 30% to 20%, from 1 January 2015.

The rate of Petroleum Revenue Tax paid on older oil and gas fields will also be reduced from 50% to 35%.

These changes are expected to increase oil production by around 15% by 2019, and drive £4 billion of new investment over the next five years.

17. Faster broadband and better mobile networks

The government is investing up to £600 million to deliver better mobile networks, and is announcing a new ambition that ultrafast broadband of at least 100 megabits per second should become available to nearly all UK premises in the country.

18. Introducing postgraduate research loans

Loans up to £25,000 will be available for postgraduate PHD and masters research students.

The government will also conduct a review into how the government can strengthen its funding for postgraduate research.

19. Further investment in science and innovation

Future economic success depends on future science success. The government is investing £140 million in world class research on the infrastructure and cities of the future, and £40 million in research into what is known as the Internet of Things. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances.

The government is also launching a new UK research initiative into the future potential of digital currency technology, supported by a £10 million increase in funding in this area.

20. The government will consult on a tax relief for local newspapers

Local newspapers are a vital part of community life, but they’ve had a tough time – so the government is announcing a consultation on how to can provide them with tax support.