Budget Snapshot 2015

18 March 2015

Budget BoxTaking place in the immediate run up to a General Election, the 2015 Budget statement was made today at 12.30pm by the Chancellor of the Exchequer, George Osborne.

About the Budget

The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover. When the Government publishes the Budget, the Chancellor gives a speech to Parliament in which he sets out the key decisions on tax, borrowing and spending, and his reasons for taking those decisions. This speech is known as the Budget Statement. The official forecast on which the Chancellor bases the Government’s Budget is provided by the Office for Budget Responsibility (OBR). The Budget Responsibility and National Audit Act 2011 requires the OBR to publish two economic and fiscal forecasts for each financial year, including one published at the Budget. The OBR’s duty is to examine and report on the sustainability of the public finances and it is required to do so objectively, transparently and impartially. PLEASE NOTE: This snapshot is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box. For full details of the following headlines (and more) you may wish to visit the HM Treasury website

Budget Snapshot

Forecasts

  • Chancellor announces the UK is the fastest growing major economy in the world and that the UK continues to stay on course for prosperity with more people now with jobs in Britain than ever before. Chancellor committed to sticking to long-term economic plan
  • The Chancellor announced adjustments to previous growth forecasts from those previously announced in the 2014 Autumn Statement.
    • Growth forecast for 2015 – revised up  to 2.5%
    • Growth forecast for 2016 – revised up to 2.3%
    • Growth forecast for 2017 – revised downwards to 2.3%
    • OBR revises  unemployment rate down to 5.3%
    • OBR borrowing forecast revised down to £75.3 billion for 2015/16
    • OBR states national debt now decreased to 80.2% of GDP
    • OBR revises downwards inflation forecast to 0.2%

Pensions / Savings

  • Annuity access rules changed to give pensioners access
  • £15,240 NISA allowance made flexible (cash withdrawn can be reinvested back into the NISA within the same tax year)
  • Help to Buy ISA introduced for first time buyers – Government to add £50 for every £200 deposit
  • New Personal savings allowance introduced – From 2016 first £1,000 of interest earned from savings will be tax free

Taxation/Welfare

  • Personal tax allowance – increased to £10,600 from April 2015 (£10,800 April 2016 / £11,000 2017)
  • Higher rate tax threshold – increased to £42,385 April 2015 (£43,300 April 2017)
  • Lifetime Allowance - reduced to £1million from 2016 (from 2018 lifetime allowance to be indexed)
  • Corporation tax to be reduced to 20%
  • Class 2 NI abolished for self employed in next parliament
  • Annual tax return to be abolished altogether from 2016
  • Big multinational companies to be targeted on profits tax.  25% charge to be levied on diverted profits made in the UK – to take effect April 2015
  • Review of deeds of variation used to avoid IHT – report due in Autumn 2015
  • Bank Levy raised to 0.21% (raising an additional £900m a year)
  • Banks also targeted to pay profits from mis-sold products
  • £75m funding committed for servicemen and women
  • National Insurance abolished for U21s from 2015
  • Automatic Charity Gift Aid raised from first £5,000 to £8,000
  • New Horse Race betting right to be introduced

Duties

  • Beer duty cut by 1p a pint
  • Cider duty cut by 2%
  • Scotch Whisky duty cut by 2%
  • Wine duty frozen

Transport/Fuel/Energy

  • Fuel duty to remain frozen again
  • Air passenger for children under 12 abolished (from 2016 for under 16)
  • From April 2015 – Tax allowance and initiatives to enable growth in the UK’s oil fuel sector
  • Petroleum revenue tax to be cut from 50% to 35% from 2016

Northern Powerhouse

  • Various commitments to growing transport, industry and skills to create growth of Northern cities
  • Plus – Various other commitments and initiatives to be applied to Southern England & Wales

Housing

  • Commitment to funding for additional housing in London
  • Help to Buy NISA introduced for first time buyers