The Chancellor has presented his Budget to Parliament – here’s a summary of what was announced.
1. 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.
2. Debt will be falling as a share of GDP in 2015-16
Debt will be falling as a share of GDP from 2015-16. This is a year earlier than forecast at Autumn Statement.
By 2014-15, the deficit is forecast to have fallen by half, from 10.2% at its peak in 2009-10, to 5% in 2014-15.
In 2018-19, the government will have a surplus (will raise more in taxes than is being spent) of £5.2 billion.
3. The tax-free personal allowance is being increased in April 2017, to £11,000
To make work pay and ensure families keep more of the money they earn, 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.
The increases to the personal allowance from £6475 in 2010, to £11,000 in 2017-18 will save a typical taxpayer £905.
To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the government will also increase above inflation the point above 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.
4. 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 they are a basic rate taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 tax-free savings allowance.
If they are a higher rate taxpayer and earn from £42,701 to £150,000, they’ll be eligible for a £500 tax-free savings allowance.
5. Introducing the Help to Buy ISA – every £200 people save towards their first home, the government will put in an extra £50, up to a maximum bonus of £3000
The government has already helped people to buy a home with Help to Buy, which allows people to purchase a home with just a 5% deposit.
The government is now going further. To help first time buyers save for a deposit, it is introducing 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.
