The 2015 Budget was announced yesterday, and with lots of changes and information to take in, you may have missed some important points. Here is a roundup of some of the key announcements made by the Chancellor George Osborne regarding personal tax and pensions.
- A national living wage will be introduced for those over the age of 25. This will start at £7.20 an hour from April next year and will reach £9 by 2020.
- The inheritance tax threshold will increase to £1 million from 2017. There will also be a new £325,000 family home allowance.
- Personal allowance will rise to £11,000 next year. The government also says that personal allowance will rise to £12,500 by 2020. This means that people working 30 hours a week on the minimum wage will not pay income tax.
- The 40p rate threshold will increase to £43,000 from £42,385 starting next year.
Pensions and In-Work Credits
- The tax-free amount you can pay into a pension over the course of a lifetime is to be reduced from £1.25m to £1m from April 2016.
- Pension input periods are to be scrapped. The complicated system determines how much tax relief you receive on your contributions.
- There is also a suggestion that pension saving will be made of after-tax income, so as to avoid paying tax on any withdrawals you make. More information on this can be found on the government website.
- A full summary on the changes to pensions can be found here.
- Tax credit and Universal Credit is to be restricted to two children, meaning these benefits will not apply to any other children. This will come into effect for those born after April 2017. The income threshold for tax credits will be reduced from £6,420 to £3,850