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Budget 2015 – Key Points in today’s Budget
You may be feeling the effects of deja vu and wondering the following, “haven’t we had a budget this year?”. You would be correct. It wasn’t that long ago we were discussing the previous budget, held in March 2015 just before the general election. Popular highlights of the last budget included a 1p cut from beer duty& 2% from cider, raising the rate of the bank levy to 0.21% and raising personal income tax allowance to £10,800. So why are we having another one so soon and what should we be expecting?
Firstly, the budget follows protocol and is always held after an election. We are sticklers for tradition and this follows an old precedent. Secondly, this budget is a departure from what has gone before. Despite it being only four months from the last one, the chancellor will no longer be reigned in by his coalition partners the Liberal Democrats. This is the first fully conservative budget since 1996, almost 20 years. Prior to today, there has been much speculation as to how deep the cuts are going to be whilst still maintaining the conservative “we’re all in it together” One Nation party philosophy. Whatever your feelings, the budget comes at a time when the Eurozone is facing it’s biggest test as Greece are in the midst of default and on top of that, escalating fears about a Chinese equities correction are beginning to deflate investor confidence. The Chancellor alluded briefly to Greece stating “”The greatest mistake this country could make would be to think all our problems are solved…You only have to look at the crisis unfolding in Greece as I speak, to realise that if a country’s not in control of its borrowing, the borrowing takes control of the country.” – These words set the course for the Chancellor’s first full conservative budget.
So without further ado, the first fully fledged conservative budget for almost 20 years:
July Budget 2015 Key Points
- In 2010 the deficit was 10.2% of national income. This year it’s expected to be 3.7% and 2.2% in 2016/17.
- NHS funding increase – £8bn above and beyond the extra £2bn this year. This will mean £10bn a year more by 2020
- Bank Levy – Introduction of an 8% surcharge on bank profits to be introduced in Jan 2016
- Non-dom status abolished – from April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens. Applicable to all UK-born citizens: they will not be able to apply for non-dom staus and will be required to pay the same level of inheritance tax. The loop-hole is hoping to raise £7.2bn and help to reduce the level of tax evasion.
- Fuel, Alcohol, Tobacco duties – Fuel duty will remain frozen at current levels.
- Regional Devolution – More regional powers have been devolved to Greater Manchester. Control over fire services, land and children services will be given to the city. More information to follow with discussions about devolution for Sheffield & Liverpool.
- Home Ownership – Mortgage interest relief is to be restricted to the basic rate of interest. Also, after multiple petitions, room rental tax relief will be raised to £7,500.
- Inheritance Tax – from 2017 a new £175,000 allowance on homes left to children or grandchildren. This will allow up to £1 million to be bequeathed tax-free.
- Corporation Tax – will be reduced to 19 % in 2017 and then to 18% by 2020.
- Income Tax – Personal allowance to be increased to £11,000 in 2016. Higher rate tax will now apply to incomes of £43,000 – 29 million people will therefore pay less tax.
The Chancellor finished his address with “One purpose, one policy, one nation.”
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Article by Michael Cooper