Emergency Budget 2015: The Financial Impact on your Pockets
8 Jul 2015 | COMMENTS: 0 | Author: Ryan Smith | News
The latest Emergency Budget speech has been announced today by the Chancellor, George Osborne.
In the first fully Conservative Budget announcement in almost 20 years (the previous one was 1996), Osborne announced a number of cuts and tax relief processes to be implemented over the coming parliament.
With the aim being to cut the welfare bill by approximately £12billion over the next 3 years, Osborne has gone someway to doing this with the policies introduced today. But what do the announcements really mean for you and how much will it impact you in real terms?
We looked at some of Osborne’s biggest announcements from today’s budget to see just how you could be affected.
National Living Wage
Rather than an increase to the minimum wage, the Chancellor has introduced the ‘National Living Wage’.
Essentially this is a new minimum wage band for workers 25 years and up. Starting next year at £7.20 an hour, this will rise to £9 an hour by 2020.
Inheritance Tax threshold Increased
Should you be one of the many people in the UK to own a house or have other assets approaching £1million in value, you’ll be pleased to hear that the IHT threshold has been increased.
Previously, each individual had a £325,000 personal allowance that allowed assets to be passed onto beneficiaries completely free of IHT – £650,000 when combined with a spouse.
There is now an additional £175,000 per person added to this allowance, but purely for property. Again, combined with a spouse means properties and other assets up to the total value of £1million can be passed free of IHT.
Changes to Benefits
The current benefit cap in the UK is £26,000. Today, plans were announced to lower the cap to £23,000 in London, and £20,000 across the rest of the UK.
Working-age benefits are to be frozen for four years and Child Tax Credits will also be cut – now only being available for up to a maximum of 2 children for new claimants.
Many lower-paid workers who rely on these to top up their income could see their actual take home pay reduced.
Rates for social housing rent will actually reduce by 1% per year for the next 4 years.
Student Maintenance Grants Scrapped
If your children are looking to go to University in the near future, then they can expect to take on a further debt and you’ll be expected to support them more than previously expected.
The student maintenance grant, that tops up the maintenance loan for living costs during studies will be scrapped and morphed into a larger loan. Previously, this additional grant of up to £3,387 was available to students from families on the lowest household incomes.
The loan value has been increased, up to £8,200 – the highest that has ever been available – though now they will be required to pay this back alongside their tuition fees
Market rent for Local Authority or Housing Association Tenants
If you’re a local authority or housing association tenant, and earning a household income of £30,000 (£40,000 in London), you will be required to pay market or near-market rent. There are around 340,000 people in the UK that this will impact, and it could see huge increases in their monthly outgoings and therefore less disposable income.
Personal Tax Allowance
The personal tax allowance will raise to £11,000 meaning your take home pay will increase.
Back in March, it was announced it was to raise from £10,000 to £10,600, a policy that came into effect from April 2015. From April 2016, you will pay no income tax on the first £11,000 that you earn each year.
For higher earners, the threshold at which the highest 45% rate of tax is paid has been increased to £43,000 per year – introduced from next April.
This will also include the income drawn from a pension, either through an annuity or pension drawdown.
Photo Credit: Lee Davy – License