The Budget 2015

by Haydon Waldek

Following yesterday’s Budget, there are a host of Budget updates and summaries available across a plethora of old and new media, all of which are a variation of this, so I don’t intend to dwell on them excessively, other than to highlight this list of the most relevant facts, some or all of which will impact upon most of our clients:

  • Personal Allowance Increase: The Allowance (above which income is subject to income tax) will be raised to £10,800 for 2016/17 (from £10,600) and to £11,000 the following year
  • New Personal Savings Allowance: 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
  • ISA Flexibility: People will have complete freedom to take money out of an ISA and put it back in later in the same tax year
  • Lifetime Pension Allowance Reduced: The total value of an individual’s combined pension pots eligible for further contributions without those now contributions being taxed on the way in, will be decreased from a maximum limit of 1.25m to £1m. 
  • Selling on Annuities: From April 2016, people who already have an annuity will be able to now effectively sell it on (subject to the value being taxed as income)
  • The Help to Buy ISA: For every £200 people save towards their first home, the Government will put in an extra £50, up to a maximum bonus of £3,000

From a personal finance perspective, I imagine that most of these changes will be viewed as positive by our clients, but from an ethical/environmental/social perspective, however, the news is far less rosy.  One positive glimmer is a commitment to increase the Minimum Wage to £8 p.h. by the end of the decade, although as Living Wage affiliates and advocates, we feel that pegging the minimum wage to Living Wage standards would help move many more people in the UK out of poverty.  

Reductions and holds on fuel, alcohol, tobacco and gaming duties does nothing to curb the ills that society suffers from making these products and services cheaper, coupled with the fact that less Government revenue will be generated which reduces the amount of money available  to be redirected to better things such as supporting the NHS and the state education system.

Finally, increased tax incentives for the North Sea oil and gas industry clearly helps secure jobs and reduce reliance on other nations, but with climate change, CO2 emissions, and the carbon dependent civilisation that we have evolved to all threatening our future, such measures can only be viewed as short-sighted and irresponsible, not least as the only new announcements made to support renewable energy alternatives is the investment in the tidal lagoon project in Swansea Bay.  Although this initiative is obviously welcome, it will be seen as fairly tokenistic compared to the drastic measures needed to promote renewable energy that a responsible government should be propagating, before it’s too late.