Among the talk of compulsory maths lessons and fizzy drinks, there were a number of big announcements regarding taxes, savings and pensions in this year’s budget.
Millions of individuals and businesses will be affected by the latest changes revealed in Chancellor George Osborne’s most recent Budget with some people experiencing drastic alterations to their finances. There were noticeable amendments to tax and savings policies, find out how you may be affected with our summary.
- The 40% income tax threshold will increase from £42,385 now to £45,000 commencing in April 2017.
- The point at which people start to pay income tax (Tax Free Allowance) will increase to £11,500 in April 2017
- Capital Gains Tax will be cut from 28% to 20% ( for basic-rate taxpayers this will be cut from 18% to 10%)
- Insurance premium tax will increase from 9.5% to 10%
- Class 2 National Insurance contributions have been abolished. This means that around 3.4 million self-employed people should make savings of over £130
- The revised threshold for small business rate relief will increase from £6,000 to £15,000
- Business rates will now be linked to CPI (the official measure of inflation). This is typically a lower rate than the RPI rate which business rates are currently measured against
- The annual threshold for 100% relief on business rates for small businesses will be increased. This will rise from £6,000 to £12,000. The higher rate will rise from £18,000 to £51,000. Approximately 600,000 firms will benefit from business rate exemption
Pensions & Savings
- The annual Isa limit will increase from £15,240 to £20,000
- A new "lifetime Isa” will be introduced. Those under the age of 40 will be eligible to save into the account with government putting in £1 for every £4 saved. The funds will be able to be used to purchase a first home or be taken out at the age of 60 as a pension
- The Help to Save scheme will help low paid workers save money. This could result in cash bonuses from the government worth up to £1,200 over four years. Read more on the Help to Save scheme here
- The Money Advice Service will be closed. This is a free financial advice service which was established in 2010
For an estimate on how much money you stand to save or lose in the coming financial year, visit The Independent website for their Budget 2016 Calculator.