The Budget - Here’s Everything You Need To Know*

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From local advisor Ian Green in just over 5 minutes

*Except for all the small print of course… That comes later!

So you can watch it on www.iangreen.tv and meanwhile, a few headlines:

Financial Planning

The tax-free personal allowance is being increased in April 2017, to £11,000
The tax-free personal allowance – the amount people earn before they have to start paying tax – will rise to £10,800 in 2016-17, and £11,000 the year after.

For the first time in a few years, a little good news for higher rate taxpayers. There will be an increase above inflation at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18 - taking it to £43,300 in 2017-18.

Big News: A new Personal Savings Allowance “will take 95% of taxpayers out of savings tax altogether”
From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings.

If you are a basic rate taxpayer and have a total income up to £42,700 a year, you will be eligible for the £1,000 tax-free savings allowance.

If you are a higher rate taxpayer and earn from £42,701 to £150,000, you’ll be eligible for a £500 tax-free savings allowance.

Access the Treasury Personal Savings Allowance one page explainer factsheet.

More Big News: Introducing the Help to Buy ISA – every £200 people save towards their first home, you get an extra £50, up to a maximum bonus of £3000
To help first time buyers save for a deposit, there is a Help to Buy ISA.
People will be able to open an ISA, save up to £200 a month towards their first home, and the government will boost it by 25%. That’s a £50 bonus for every £200 people save, up to £3000.
Access the Treasury’s Help to Buy: ISA one page explainer factsheet.

You can take money out of an ISA and put it back in later in the (tax) year
ISAs are being reformed so that instead of being able to put up to £15,240 in the 2015-16 tax year into an ISA in total, people can take out their money and put it back in within the same year, without losing their ISA tax benefits - as long as the repayment is made in the same financial year as the withdrawal. That’s good, and sensible, and removes a ridiculous old rule that was never needed in the first place!

Freedom to sell annuity for a cash lump sum
From April 2016, people who already have an annuity will be able to now effectively sell it on, so that they can benefit from the pension freedoms announced at last year’s Budget.
Currently, people who have bought an annuity are unable to sell it without having to pay at least 55% tax on it. From April 2016, the tax rules will change so that people who already have income from an annuity can sell that when they choose and will pay their usual rate of tax they pay on income, instead of 55%.

Digital Tax Accounts instead of an annual tax return
Individuals will have the information HMRC needs automatically uploaded into new digital tax accounts.
Hmmm. In principle, great, but the number of errors I encounter with HMRC, and the time it takes to right them, worries me slightly.

Pension Lifetime Allowance cut
The amount you can accrue in a pension, down from £1.25m to £1m

Other Notables
£1.25 billion for children’s’ mental health services
An extra £1.25 billion will be spent on mental health services for children and new mums.

Cancelling the fuel duty increase scheduled for September
Fuel duty will be frozen again; since 2011, the government has cut and frozen fuel duty.
By the end of 2015-16 fuel duty will have been frozen for five years.

Cutting beer duty
Soundbite line was “penny off a pint”. There was a 2% cut for spirits and most ciders, and a freeze on duty on wine.

Charities will be able to claim more gift aid on small donations
The amount of small donations charities can get an extra 25% top up payment on in gift aid without needing any paperwork is increasing from £5,000 to £8,000 a year.

Farmers will have more time to average their profits for income tax
This extends the period from two to five years, and will give farmers additional security as they typically have volatile profits due to uncontrollable factors such as the weather.

£100 million for driverless car technology
Lewis Hamilton can’t be pleased with that one!!!

Making sure banks pay their fair share
Increase in the rate of the bank levy (one of the taxes that banks pay) from 1 April 2015
Banks will no longer be able to avoid tax on compensation payments paid to mis-sold customers (how was that EVER allowed in the first place!?)

Faster broadband and better mobile networks
Up to £600 million to deliver better mobile networks, and a new ambition that ultrafast broadband of at least 100 megabits per second should become available to nearly all UK premises in the country.
Still can’t get a proper signal at the end of my garden or in the back bedroom…

Postgraduate research loans
Loans up to £25,000 will be available for postgraduate PHD and masters research students.

The government will consult on a tax relief for local newspapers
Local newspapers are a vital part of community life, but they’ve had a tough time - so the government says it is announcing a consultation on how to can provide them with tax support.

Films, Video Games and Orchestras should also get help.

Support for all regions across the UK
Sounded a bit like a shout-out for the Radio One roadshow!

The Treasury said the UK had the fastest growth in the G7 in 2014
The UK economy had the fastest annual growth among G7 economies in 2014, and the strongest annual growth since 2007. At the end of 2014, employment had reached its highest ever level, unemployment has been falling in every region across the UK, and inflation is at a record low.

But risks still remain and there is still more to do to support businesses and boost productivity.

Click to download the new Financial Tax Tables

Ian Green

The required regulatory stuff: Please don’t take this article as personal or specific financial advice. It is intended to be guidance only. The value of any tax break will depend on your personal circumstances. Tax and the associated laws are subject to almost constant change. This is correct as at the time of writing. E&OE. If you are in any doubt as to whether this information is of benefit to you please seek independent financial advice. Please remember if you invest in stocks and shares the value of your investment can go up as well as down. Other elements such as currency exchange fluctuations could affect the value of your investment. If you have property based investments you may not be able to sell when you wish to realise your funds. Past performance is no guarantee of future returns. If you invest in cash based investments inflation may erode the purchasing power of your savings. Green Financial Advice Limited is Authorised and Regulated by The Financial Services Authority No. 523308

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March 20, 2015