Budget Summary Spring 2015
With polling day just over seven weeks away, Mr Osborne’s sixth Budget was always going to be heavily laced with politics. Some of the proposals the Chancellor announced may not survive to become legislation depending on the result of the election.
This uncertainty did not stop Mr Osborne revealing a number of new measures. The proposal to allow existing pension annuity owners to sell their income in return for a lump sum will create flexibility for those excluded from April’s radical reforms. However, those who have not yet retired were on the receiving end of bad news in this Budget: a further reduction in the lifetime allowance, cutting it to the £1 million that the Shadow Chancellor had proposed only last month.
Savers were offered a new personal savings allowance (worth up to £200 a year) and more flexibility and investment options for their individual savings accounts (ISAs), all due after the election. There were also changes proposed to venture capital trusts (VCTs) and enterprise investment schemes (EISs), some of which had not been expected.
The planned abolition of the annual tax return will be welcome news for many, but it will take time to become a reality and it is unclear whether the reform will be accompanied by a change to the timing of tax payments.
- A new Help to Buy ISA will be introduced with the government providing a £50 bonus for every £200 of monthly savings up to a maximum of £3,000 on £12,000 of savings. The aim is to start the scheme from autumn 2015.
- In another reform to the ISA regime, investors will be able to withdraw money from their cash ISAs and replace it in the same tax year without it counting towards their annual subscription limit. The intention is that this too will be introduced this autumn.
- There will be a cut in the pension lifetime allowance to £1 million from April 2016, together with another set of transitional protection rules.
- The personal allowance will increase to £10,800 in 2016/17 and £11,000 in the following year.
- The higher rate threshold will rise to £42,700 in 2016/17 and £43,300 in 2017/18, the first above-inflation increases in the threshold for seven years.
- The government proposes to abolish self-employed Class 2 national insurance contributions some time in the next parliament.
- Self-employed farmers will be able to average their profits over five years instead of just two from April 2016.
- Charities will be pleased by the proposed increase in the Gift Aid Small Donation maximum amount from £5,000 to £8,000 from April