We’ve been waiting for this Budget with bated breath since the Conservatives won the election in May – and the Chancellor delivered a lot in his “big Budget” of Summer 2015. In many ways, Mr Osborne’s announcements this time around are more important than in March, as this Budget sets out many of the measures the Conservatives have wanted to put in place for some time.
How is this Budget going to affect you? One of the most talked about features has been the plan to cut the welfare bill by £12bn, as Mr Osborne aims to be “bold in building the aspirations of working people”. There will be major changes to the system of tax credits, with only those lowest-income families being able to claim tax credits. This will be combined with changes to entitlement to Universal Credit.
Property also featured heavily, with some important changes for landlords:
- Tax relief on mortgage interest payments on residential property will be restricted to the basic rate of tax, a change that will be phased in over four years from April 2017.
- Private landlords’ wear and tear allowance will be replaced in April 2016 with a deduction for the actual cost of replacing furnishings.
- There will be an extra inheritance tax nil rate band for main residences passed on death to descendants, starting at £100,000 in 2017-18 and rising to £175,000 by 2020/21.
From 6 April 2016 the lifetime allowance for pensions will be reduced from £1.25 million to £1 million as previously announced.
From April 2016 a tapered reduction in the amount of the annual allowance will beintroduced for individuals with income (including the value of any pension contributions) of over £150,000 and who have an income (excluding pension contributions) in excess of £110,000.
The cost of funding free TV licenses for the over-75s will be transferred from the government to the BBC between 2018 and 2021.
- The annual household benefit cap will be reduced to £23,000 in London and £20,000 elsewhere.
- There will be a consultation on changing Sunday trading laws.
- Subsidies for social housing will be phased out for local authority and housing association tenants in England who earn more than £30,000 (£40,000 in London). Tenants will have to pay up to the market rate.
- Dividend tax credit will be abolished from April 2016 and there will be a new dividend tax allowance of £5,000 a year. In addition, there will be new dividend taxes.
- The NIC employment allowance of £2,000 will rise to £3,000 from April 2016, but will not be available for single director/employee companies.
- Non-UK domiciled individuals who have been resident in the UK for at least 15 of the last 20 years will be treated as UK domiciled for tax, including inheritance tax, from April 2017.
- The government will be consulting on radical reform of the system of tax relief for pensions.
- The introduction of the secondary market in pension annuities has been postponed until 2017.
10th July 2015