2015 Budget Special: all the news

2015 Budget Special : measures for savers

The Chancellor’s Budget Speech focused on four key areas, which formed the foundation of proposed Government policies for the next few years.

As previously announced, up to five million pensioners are being given the opportunity to cash in their existing pension annuities. When the changes come in, savers will be allowed to take their whole pot in a single lump sum, or make withdrawals as they see fit.

The new flexible ISA will allow individuals to withdraw their savings and then make further investments up to their annual allowance, without being penalised, so long as the transaction occurs within the same tax year. From 6 April this year, the ISA allowance will be set at £15,240.

The Help to Buy: ISA, which combines an ISA with the Help to Buy scheme for first time house buyers, means that the Government will top up savings by £50 for every £200 saved. These ISAs are intended to help individuals save for a mortgage deposit. Government contributions will go up to a maximum of £3,000 per Help to Buy: ISA.

Additionally, the Personal Savings Allowance means that the first £1,000 of savings income will be free from tax for most individuals from April 2016.

The Chancellor said that these measures will create tax-free banking for almost the entire population.

2015 Budget Special: the political reaction

Chancellor George Osborne unveiled a number of measures in his Budget Speech today, revealing employment figures and growth predictions for the rest of the decade. He spoke positively on the progress that the Government has made in reducing the deficit and the possibility of a budget surplus. However, the other political parties were less encouraged.

In response to the Budget Speech, Leader of the Labour Party, Ed Miliband, said: ‘The working people of Britain are worse off under the Tories . . . and since the election working people’s living standards are £1600 a year down’.

He continued: ‘Today the Chancellor simply reminded people of the gap between the Chancellor’s rhetoric and the reality of peoples’ lives’.

Green Party leader Natalie Bennett described Mr Osborne’s tone as ‘triumphalist’, and said: ‘It’s not like our current growth economy has delivered for people’s lives. What we need to do is invest in a huge range of things’.

Stewart Hosie, Scottish National Party (SNP) deputy leader and Treasury spokesman, commented: ‘Today George Osborne could have delivered a Budget focused on delivering economic growth by tackling inequality.

‘He has not – he has decided to continue with his utterly failed austerity agenda.’

Prime Minister David Cameron defended the Government’s successes, saying: ‘The highest employment rate in our history is not a dry fact, it means more people with the security of a pay packet and a brighter future’.

2015 Budget Special: ‘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%. A budget surplus of 0.2% has been forecast for 2018/19, with borrowing levels revised downwards from the previous Autumn Statement forecast, to £90.2bn for 2014/15.

However, despite a £6bn windfall resulting from lower oil prices and welfare costs, the Chancellor announced that further savings to the tune of £30bn would be needed by 2017/18.

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 rise to £10,800 next year and £11,000 the following year, 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 5m existing pensioners will be given access to their annuities from 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 for most savers, 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 planned reduction in the Annual Investment Allowance to £25,000 will no longer take effect from 1 January 2016. Additional news for businesses included further measures aimed at supporting regional growth and tax cuts for the North Sea oil and gas industry.

Other measures announced include a 1p cut in beer duty, together with a cancellation of September’s planned fuel duty increase, which the Chancellor claimed would cut the price of a tank of petrol by £10.

2015 Budget Special: the business reaction

CBI Director-General, John Cridland, said: ‘It’s positive that the Government has accepted the independent Low Pay Commission’s (LPC) recommendations on the adult and youth rates. The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects’.

However, he voiced concern that the Government chose to increase the minimum wage for apprentices to higher than recommended.

EY Managed Services Partner, Graeme Swan, reacted to plans to completely abolish self-assessment tax returns, saying it is ‘a necessity and a reality in the digital world we live in. The move to an online individual tax account will make it much easier and simpler for customers’.

In response to the proposed pensions changes, allowing individuals to trade their annuities, TUC General Secretary, Frances O’Grady, said: It’s hard to see how such a trade in so-called ‘death bonds’ could work without a strong risk that many retired people will get a poor deal’.

John Longworth, Director General of the British Chambers of Commerce (BCC), said: ‘The Budget unveiled today recognises both short-term and electoral horizons and long-term economic needs. The Chancellor’s focus on business growth and prosperity will receive a warm welcome from businesses of all sizes’.

‘Businesses in every corner of the UK want more sustainable public finances, and they also want governments to take steps to support growth. Once again, it appears that the Chancellor has pulled off a difficult balancing act, maintaining fiscal discipline while ensuring that necessary deficit reduction doesn’t undermine the UK’s growth prospects.’

2015 Budget Special: the business reaction

CBI Director-General, John Cridland, said: ‘It’s positive that the Government has accepted the independent Low Pay Commission’s (LPC) recommendations on the adult and youth rates. The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects’.

However, he voiced concern that the Government chose to increase the minimum wage for apprentices to higher than recommended.

EY Managed Services Partner, Graeme Swan, reacted to plans to completely abolish self-assessment tax returns, saying it is ‘a necessity and a reality in the digital world we live in. The move to an online individual tax account will make it much easier and simpler for customers’.

In response to the proposed pensions changes, allowing individuals to trade their annuities, TUC General Secretary, Frances O’Grady, said: It’s hard to see how such a trade in so-called ‘death bonds’ could work without a strong risk that many retired people will get a poor deal’.

John Longworth, Director General of the British Chambers of Commerce (BCC), said: ‘The Budget unveiled today recognises both short-term and electoral horizons and long-term economic needs. The Chancellor’s focus on business growth and prosperity will receive a warm welcome from businesses of all sizes’.

‘Businesses in every corner of the UK want more sustainable public finances, and they also want governments to take steps to support growth. Once again, it appears that the Chancellor has pulled off a difficult balancing act, maintaining fiscal discipline while ensuring that necessary deficit reduction doesn’t undermine the UK’s growth prospects.’

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