Commercial awareness will play an important part in an assessment centre at Grant Thornton. There will be a high chance that your interviewer will ask you about your thoughts on the most recent Budget and how this could affect Grant Thornton and our clients.
With the Election less than 50 days away, George Osborne primarily aimed at neutralising claims from the main opposition parties that the Conservatives were planning to radically cut public spending. He made it clear that ‘we are all in this together’ with growth up, unemployment down, borrowing down and out of the red and into the black by 2018/19.
From a business perspective, the Budget was light on new measures: this was a Budget for savers! I have summarised the key points below into categories.
Savings and pensions
- Help to Buy ISA – for every £200 a first time buyer saves in the ISA, the government will ‘top up’ with £50 to a maximum of £3,000 on £12,000 savings. These limits will apply per person rather than per property. However, the measure does not deal with the current housing shortage or the lack of supply of suitable housing. Our concern is therefore that the boost provided though the tax system could result in higher demand and ultimately lead to higher house prices.
- Personal savings allowance – from 6 April 2016 £1,000 of savings income (ie interest on your bank account) for basic rate taxpayers will be tax free, £500 for high rate taxpayers and no allowance for additional rate taxpayers.
- A more flexible ISA – individuals will be able to withdraw and replace money from their cash ISA in-year without it counting towards their annual ISA subscription limit. These changes should apply from autumn 2015.
- Lifetime allowance for pension contributions – the allowance will be reduced from £1.25 million to £1 million from April 2016. The allowance will be indexed annually in line with the consumer price index from 2018. Even though the allowance will rise with inflation, we do not know if the allowance will be further reduced in the future.
- Annuities – future legislation will allow pensioners already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a cash lump sum. The ability for pensioners to take a cash lump sum from their pension may mean an increase in pensioners buying property/other investments with their retirement money.
Personal tax and inheritance tax
- Income tax personal allowance – there will be an increase in your personal allowance from the current £10,000 to £10,600 in April 2015, £10,800 in April 2016 and £11,000 in April 2017. Both the higher rate threshold to which individuals start to pay income tax at 40% and the National Insurance contributions upper earnings and upper profit limits will also increase.
- Inheritance tax, deeds of variation – the Government will review the use of deeds of variation for tax purposes to clamp down on tax avoidance.
- Personal tax returns – annual tax returns will go digital with individuals reviewing pre-populated information that HM Revenue and Customs holds about their income via new digital tax accounts.
- National Insurance contributions – confirmation of no National Insurance contributions for the younger workforce and apprentices.
- Annual investment allowance – a delay of any decision around maintaining the annual investment allowance at its higher level of £500,000 per annum until the Autumn Statement later this year.
- Review of business rates – to ensure that the system is fit for a 21st century economy.
- Corporation tax rate – will be 20% for the financial year 2016.
Energy, fuel and duties
- Fuel – the planned fuel duty increase has been scrapped. ‘£10 off a tank with the Tories.’
- Alcohol – another penny off a pint. Cider, whisky and spirit duty cut by 2%. Wine duty has been frozen.
- Oil and gas – tax cuts to petroleum revenue levies, supplementary charges and a tax allowance.
The Election campaigns are now in full swing! With less than 50 days to go, will this Budget heavily sway the publics’ voting opinions? We look forward to seeing if it does and will be covering the future Election in May.
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