Budget Highlights – Budget Report 18 March 2015
‘Britain is walking tall again’, proclaims Chancellor
Chancellor George Osborne delivered his 2015 ‘pre-election’ Budget in bullish mood. Proclaiming that ‘Britain is walking tall again’, the Chancellor announced that the national debt target has been met and predicted the ‘end of austerity’ a year early.
The Office for Budget Responsibility has revised economic growth slightly upwards from 2.4% to 2.5% for 2015, while inflation has been revised down to 0.2% and borrowing levels revised downwards from the previous Autumn Statement forecast, to £90.2bn for 2014/15.
However, despite assigning significant funds from bank asset sales and lower welfare bills to ‘pay down the national debt’, the Chancellor announced plans for further deficit reduction.
While keen to emphasise the benefits of ‘sticking to the fiscal path’, the Chancellor found room for a number of measures for individuals and businesses.
Among the headline measures for individuals was the announcement of plans to scrap annual tax returns, replacing them with ‘digital tax accounts’. The income tax personal allowance will also see additional increases, rising to £10,800 next year and £11,000 from April 2017, while the higher rate threshold will see an above inflation rise from £42,385 to £43,300 by 2017/18. Meanwhile, the pension lifetime allowance will fall from £1.25m to £1m from 2016/17.
The Chancellor also unveiled some key reforms for savers, confirming that five million existing pensioners will be given access to their annuities from April 2016. In addition, cash ISAs are set to be made more flexible from the Autumn. A new Personal Savings Allowance will make the first £1,000 of interest on savings tax-free (£500 for higher rate taxpayers), while first time buyers will be offered a helping hand onto the property ladder, via a new Help to Buy: ISA.
Having already confirmed the launch of a business rates review in the run-up to the Budget, the Chancellor announced that the Annual Investment Allowance will not be cut to £25,000 in January 2016, with the limit instead being reviewed at the 2015 Autumn Statement. Additional news for businesses included further measures aimed at building a Northern Powerhouse and supporting regional growth, investment in science and tax cuts for the North Sea oil and gas industry.
Other measures announced include a 1p cut in beer duty and a cancellation of September’s planned fuel duty increase, a move which prompted the Chancellor to quip ‘That’s a tenner off the tank with the Tories’.
- Income tax personal allowance to reach £11,000 by 2017
- ‘Radical’ business rates review before 2016 Budget
- New Personal Savings Allowance from April 2016
- Digital tax accounts to replace annual tax returns
- New Help to Buy: ISA for first time buyers
- Increased flexibility for cash ISAs from Autumn 2015
- Rules on annuities to be relaxed from April 2016
- Pension lifetime allowance to fall to £1m from April 2016