Summer Budget 2015 – Key Headlines

Taxation/Welfare

• New National Living Wage of £7.20 to be introduced in April 2016 (to reach £9.00 per hour by 2020 – compulsory for working people aged 25 and over)
• £12billion in savings required through welfare changes
• £5billion in savings through crackdown on tax evasion and avoidance
• Corporation tax to be reduced to 19% in 2017 / 18% in 2020
• Non-domiciled taxation status to be abolished from April 2017
• Dividend tax credit to be replaced by £5,000 tax free allowance
• Inheritance Tax  – up to £1million can be passed onto children without inheritance tax.  This measure also introduces an additional nil-rate band when a residence is passed on death to a direct descendant.  Any unused nil-rate band will be transferred to a surviving spouse or civil partner. It will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

• NHS to receive a further £8billion over the next five years
• Public Sector pay rises of 1% for the next four years
• New youth obligation for 18-21 year olds to ‘earn or learn’
• Automatic housing benefit abolished for 18-21 year olds
• Rents in social housing sector reduced by 1% a year for next four years
• All working parents with children age 3 & 4 to receive 30 hours of childcare per week
• Working age benefits to be frozen for four years
• Benefits cap to be reduced to £23,000 in London and £20,000 elsewhere
• Threshold in tax credit to be reduced from £6,420 to £3,850
• Tax credit and universal credit limited to two children after April 2017
• Annual investment allowance set at £200,000
• Personal tax allowance – increased to £11,000 from April 2016 (further rises in line with minimum wage)
• Higher rate tax threshold – increased to £43,000 from April 2016
• Disability benefits will not be taxed or means tested
• Bank Levy to be reduced over the next 6 years / 8% surcharge on bank profits to be applied from January 2016
• Insurance premium tax to be raised from November 2015 to 9.5%

Pensions / Savings

• Green paper to be issued on reform of pensions

National Security

• Real increase in defence budget guaranteed every year
• Joint security fund of £1.5billion to be created by the end of Parliament
• Commitment to meet NATO pledge of 2% of national income on defence

Housing

• Mortgage interest relief restricted to basic rate of income tax
• Reduced tax relief for buy-to-let landlords
• Rent a room relief to be raised to £7,500 from 2016

Education

• New apprenticeship levy on all large firms
• To support Universities – From 2016/17 (academic year) maintenance grants to be replaced by loans for students. Loans only need to be repaid once the individual is earning over £21,000 per year.

Transport/Fuel/Energy

• New car tax bands introduced for new cars from 2017
• Vehicle Excise Duty: £140 per year for 95% of new cars from 2017
• New roads fund will benefit from car tax payments
• First MOT to be extended to 4 years from 3
• Fuel duty to remain frozen this year
• Climate change levy to be removed

Northern Powerhouse

• Further powers to be devolved to Greater Manchester (option available to other cities)
• £30million funding for Transport in the North
• Various commitments to growing transport, industry and skills to create growth of Northern cities