On 8 July 2015 George Osborne took to the floor of the House of Commons to deliver his second Budget of the year. This was the first time since 1996 that a Conservative Government have delivered a Budget and many commentators where unsure what it may mean for businesses and individuals.
However, within the first few minutes of delivering his speech the message from the Chancellor was clear.
He said that the Budget recognised “the hard work and sacrifice of the British people over the past 5 years” and that it would move Britain from a “from a low wage, high tax, high welfare economy” to a “higher wage, lower tax, lower welfare country”
He then went on to announce measures in the Budget statement, which included:
- A reform to the dividend tax credit (which reduces the amount of tax paid on income from shares) will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016.
- A new living wage will be launched, which will see people over the age of 25 receive a minimum wage of £7.20 an hour next year – increasing to £9 an hour by 2020.
- Changes to inheritance tax that will see the creation of family home allowance, which will mean that by 2020-21 people will be able to pass on an estate worth up to £1 million.
- A reduction to the amount of money top earners can pay into their pensions that will see the annual pension allowance for those earning more than £150,000 tapered down from £40,000 to £10,000.
- The annual investment allowance will be set at its highest ever permanent level at £200,000 at the start of next year, well above the £25,000 limit it was meant to drop to, but still below the current £500,000 allowance.
- Small business owners will see their National Insurance bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000.
- Currently landlords can deduct their costs from their profits before they pay tax, receiving tax relief at 40% and 45%. This tax relief will be restricted to 20% for all individuals by April 2020.
These are just a few of the new measures announced during the Budget. If you feel that any of these could affect you or would like more advice on any aspect of the summer Budget, please contact us.