Budget 2015 Summary – What You Need to Know

George Osborne gave his final Budget for 2015 before May’s general elections and there are big changes that will follow when the new tax year starts. A pensions overhaul and further help from the government for first time buyers were just some of the plans the chancellor had unveiled in last week’s announcement. We’ve pulled the key points from the Budget 2015 that you should be aware of and how it will affect your personal finances.

Pensions

  • From 6 April 2016 the tax-free lifetime allowance – the maximum amount that can be saved into a pension – will be cut from £1.25million to £1million. Fewer than 4% of pensioners are said to be affected.
  • Also from 6 April 2016 new legislation will allow pensioners immediate access to their annuity without paying the 55% tax on it. They’ll be able to sell it to a third party in exchange for a lump sum and pay the usual income tax rate.

Income Tax

  • Personal allowance will rise from £10,000 to £10,600 and then £10,800 next year, and £11,000 the year after (2017). This is the proportion of a person’s income that won’t be taxed and applies to everyone that earns up to £100,000.
  • Marriage tax allowance will rise; married couples will be able to share up to £1,100 of their unused annual tax allowance to their spouse.

Savings

  • A new personal savings allowance will mean the first £1,000 of savings from income will be tax free next April. Higher rate tax payers will have a personal savings allowance of only £500.
  • First-time buyers will be able to save £200 for a deposit in a new Help to Buy ISA, which a bonus of £50 will be added by the government for every £200 saved.
  • A change in the rules in autumn will mean savers can take out money from their ISAs and replace in the same tax year without losing their tax-free entitlement.

Tax Returns

  • There are plans to abolish the annual tax returns within the next five years which will be replaced with digital tax accounts that can be checked at any time.

Alcohol and Cigarettes

  • Tax on a pint of beer will be cut by one penny (1%).
  • Duty on cider, whiskey and spirits will fall by 2%.
  • There will be a freeze on wine duty so don’t expect and price hikes there.
  • The price of cigarettes will again increase by the usual 2 per cent above inflation, so that’s 16p extra per pack of 20.

Petrol

  • Freeze on fuel duty has been extended with the planned September increase cancelled.

Wages

  • The minimum wage employees are entitled will rise to £6.70 meaning more than 1.4 million people will benefit from the 3% increase.

Education

  • Graduates wanting to pursue a PhD or masters but are unable to find the adequate funding or support will have access to loans of up to £25,000.

So there you have it. Of course there was a lot more that was covered in the speech however these are just the main points of the all-important Budget that we think will affect you most. To find out more about the other impacts of the Budget 2015 click here.