It’s been two weeks since George Osborne delivered his sixth and final (of the current Parliament at least) Budget.
If you’ve yet to find out what changes the Chancellor proposed and how they’ll affect you, have no fear, our quick budget guide has a round-up of all the highlights.
One of the surprise features of the 2015 budget was the decision to give savers a tax break on interest. Outside of the ISA wrapper, savers will be able to earn up to £1,000 tax-free, in a move that the chancellor claims will see 17 million people better off.
The maximum £1,000 applies to basic rate taxpayers, but 40% taxpayers will also get £500 tax-free, while 45% taxpayers are excluded from the deal.
While we can’t grumble about a tax break on savings, it does leave us wondering about the future of ISA savings accounts. The personal allowance has recently been bumped up to £15,240. As well ISAs becoming more flexible, whereby you’re able to withdraw money from the ISA and deposit without it affecting your allowance, as long as it is done within the same financial year it won’t effect your allowance.
When the Lib Dems formed the coalition with the Tories, they promised that they would achieve the goal set out in their manifesto to raise the personal income tax allowance to £10,000. Well, they have done that, and by some margin.
With an increase to £10,600 already planned for the new tax year, it was announced in the Budget that the personal allowance would rise £10,800 in 2016-17 and £11,000 in 2017-18. That means more of the money you earn will end up in your pocket, rather than the taxman’s.
The basic rate tax threshold will also increase to £31,900 in the next tax year, meaning that you’ll only pay 40% if you earn more than £42,700 a year. This will rise again to £43,300 in the 2017-18 financial year.
Help to Buy ISA
While the future of the cash ISA hangs in the balance, the government has introduced another initiative to help first-time buyers get on the property ladder.
The Help to Buy ISA allows you to save up to £200 a month in the new account. For every £200 deposited, up to £12,000, you’ll get a £50 top-up from the government. So, if you save the maximum, you’ll get a £3,000 bonus, bringing your savings to £15,000.
The money can be put towards to buying a new home with a value of up to £250,000 (£450,000 in London).
Savers can withdraw their cash, but unless the funds are put towards buying a new home, the bonus won’t be available. The Help to Buy ISA will become available later in 2015.
Alcohol & tobacco
As if paying less income tax on earnings and interest wasn’t good enough, the latest budget has also cut the duty on beer by 1p a pint, and cider by 2p. Spirits have also benefited from a 2% cut in excise duty, while that on wine has been frozen.
There we no changes to tobacco taxes, so the planned rise of 2% above inflation will still go ahead. This is equivalent to 16p on a packet of 20 cigarettes. If you smoke 20 a day, you’ll be more than £50 out of pocket by the end of the year.
There has been talk of some radical changes on annuities in recent years, and while the changes will generally be welcomed with open arms, it was thought that some pensioners would be stuck with an annuity they no longer want.
An annuity is essentially an insurance policy that provides a guaranteed income for the rest of your life, in exchange for your pension pot.
However, the chancellor has confirmed that the five million people already locked into an annuity will be able to sell them in exchange for a cash lump sum without any tax penalty, should they wish to do so.
Are you better or worse off?
So, now you’ve seen the highlights of the 2015 budget, we’re going to crunch the numbers and find out if you’ll end the year with more or less money in your pocket.
If you don’t have children, you’ll be better off in most scenarios as jobseeker’s allowance has gone up, personal tax allowance is higher, and tax thresholds mean most will pay less (or the same) tax.
Parents will also be grateful for the changes as tax credits and child benefit payments have gone up, while National Insurance has gone down.
|Written by :|
|Jemma is a news & research reporter for compareandsave.com.Having worked as a journalist on a number of personal finance websites; she now spends time researching and commenting on UK personal finance stories and investigating new ways to help our readers save money.For press enquiries, please visit our Media Centre page.|