Budget In Brief

Growth

Economy grew 3% in 2014

OBR has re-set growth figures to 2.4% this year but Chancellor stated still have strongest economic growth of developed world

2016 2.3%, 2017 revised up 2.4% then strong for rest of decade

Targeting 2m more jobs this parliament

Deficit

Forecast to fall to 3.7% – one third of what it was

OBR stated it will then fall to 2.2% in 2016/17, 1.2% in 17/18, 0.3% in 18/19 then surplus (1 year later than planned)

Housing

3 important changes:-

BTL mortgage interest relief restricted to basic rate of income tax – phased 20% rather than 40%

Rent a room relief rise to £7,500

IHT £175k relief when leave home to kids on top of £375k – therefore £500,000 new IHT threshold per person

Tax

Personal Tax allowance rise to £11,000

40% Higher Rate banding moved from £42,385 to £43,000

Company & Employment

New National Living Wage compulsory from April for over 25 – starting at £7.20 per hour and rising to £9 per hour over time (min. wage £6.50 today).

Tax & NI cut for small businesses to offset this – allowance increased by 50% to £3,000 from 2016

Apprenticeship levy on all large firms

Corporation tax reduced to 19% in 2017 and 18% in 2020

Public Sector Pay

Public sector pay rises capped at 1% next 4 years

Tax Avoidance

Boosting HMRC to go after tax fraud and offshore trusts

Name and shame users of avoidance schemes

Personal service and disguised employment targeted

Permanent non-dom tax status abolished from April 2017 – if in UK 15 out of last 20 years full tax on worldwide assets – raise £1.5b

Bank Levy

Will gradually reduce rate over next 6 years (hope to appease those thinking of leaving country), but will charge 8% surcharge on bank profits from next year

Cars

New vehicle excise duty of 3 bands for new cars only – low, standard £140 per annum and premium – existing cars stay same – No MOT till 4 years rather than 3

New Roads Fund financed by every penny of above

Benefits

Social housing rents reduced by 1% per annum for next 4 years

Rents must now be paid at market rate for those in Social Housing with higher incomes

Annual tax relief on pension contributions to be limited to £10,000 a year

No automatic housing benefit for 18-21 year olds

Disability benefits not means tested and not taxed

Working-age benefits frozen for four years

Tax credits and Universal Credit restricted to two children, for those born after April 2017

Other

Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5% from November

Replace maintenance grants with loans for new students – increased to £8,200 and only repayable if earning above £20k ish

Free child care up to 30 hours per week

Nothing on booze or fags

Think that’s about it! Commentary to follow…

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