ELLIOTT Buss, Senior Tax Manager at UHY Hacker Young reviews the announcements made in the 2015 Budget and what they mean for people and businesses in Wales:
Workers
The personal tax-free allowance will be increased to £10,800 in April 2016, and to £11,000 in April 2017. Effectively a tax cut for 27million people equating to a £200 cut for lower rate payers and maybe £400 for higher rate payers.
The threshold at which people start paying 40p tax is to rise by above inflation from £42,385 to £43,300. Osbourne also says that he eventually wants to raise the tax free allowance to £12,500 and the 40p rate to £50,000.
Young workers
Employers’ National Insurance contributions for under-21s to be abolished from this April, and for young apprentices from April 2016.
Drinkers
Beer duty will be cut for the third year running, knocking 1p off the price of a pint. Cider duty to be cut by 2%, the duty on Scotch whisky and other spirits is to be cut by 2% and duty on wine will be frozen.
Drivers
Fuel duty increase scheduled for September is cancelled, which is said to equate to £10 of the price of a tank of fuel.
Mr Osbourne also announced an abolition of VAT on the Severn Bridge tolls and the Category 2 for small vans and buses, so those drivers will pay the same as car drivers.
Savers and Pensioners
Pension pot lifetime allowance to be reduced from £1.25m to £1m from next year, but this will affect less than 4% of people nationally.
Pensioners will now be able to cash out purchased, and currently non-refundable, annuities. Allowing annuity sales will therefore provide around five million pensioners with the option of trading an eventual fixed income for a one off lump payment.
The Chancellor also announced that savers will not have to pay any tax on the first £1,000, or the first £500 for higher-rate taxpayers. We have also been told that a personal savings allowance is to be launched, which will take 95% of Britons out of savings tax altogether.
The introduction of the new Flexible ISA will allow savers to withdraw and re-invest money into their ISA without affecting their tax-free limit. The Chancellor’s announced this as trusting people with their own money, and it does make sense.
Prospective first time buyers are also to be given a helping hand with the creation of the new Help to Buy ISA, which will see the government contribute £50 for each £250 saved by first-time buyers. Savers who invest £12,000 could stand to make as much as £3,000.
Businesses
Osbourne has promise that the next parliament will abolish the Class 2 National Insurance contributions for the self-employed.
The Chancellor also confirmed the planned review of business rates. However thanks to the Wales Act of 2014, the reality is that the outcome of any investigation would be limited to England.
Tax on "diverted profits" is to come into effect next month. This is aimed at multinational firms moving profits "artificially offshore" to mitigate against UK tax.
Farmers
Farmers to be allowed to average incomes for tax purposes over five years, allowing them to offset bad years against the good.
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