Why The Budget Really Matters

Key points from the budget:

• A ‘post-austerity’ growing economy all the way to prosperity – the forecast of GDP for this year has been revised upwards to 2.5%, giving Britain the 2nd strongest growth of all G7 members after the USA.
• A higher tax threshold – an increase in the personal tax free allowance to £10,800 next year and £11,000 in 2017 (+3.8%); taking many lower paid and part-time working people out of tax altogether and providing an extra £200 for 24 million basic-rate taxpayers. The lower paid 50% of earners now pay a smaller proportion of income tax than at any period under the previous government; the highest paid, 1% of the population now pay 27% of all income tax, up from 25% in 2010.
• Higher tax threshold for middle earners – the threshold for the upper 40% tax band increases above inflation from £42,385 to £43,300 which benefits lots of hard working families in our constituency.
• Getting Britain back to work – We will see the minimum wage rise by 3% and apprentice pay rise by 20%.
• A higher reward for savings – recognising the long-term value to the economy that comes from savings and investment, a new personal savings allowance will be introduced whereby the first £1,000 earned is tax-free [£500 for higher rate taxpayers] – removing 90% of savers from taxation; people will be given the freedom to choose how they use their pension savings.
• Help for first-time home buyers – the Help to Buy ISA will offer the chance to first-time buyers to save tax-free, like a pension, towards a deposit on a house, ensuring long-term saving is rewarded at all stages of life. This tax relief means that saving £200 gets topped up to £250 meaning people saving £12,000 will get £15,000 after the Government’s contribution.
• Supporting small business owners – Class 2 National Insurance contributions will be abolished for all the self-employed, and the annual tax return will cease to exist, helping small business owners to concentrate on running their business. Corporation tax will be reduced to 20% ensuring Britain’s businesses can compete globally.
• Tax on “diverted profits”– to come into effect next month, aimed at multinational firms moving profits “artificially offshore”; a policy that will please many who were frustrated with the unfair tax policy for certain businesses.
• Annual bank levy to rise to 0.21%– raising an extra £900m in Tax revenue. Banks will also be barred from deducting compensation for mis-selling from corporation tax

All views and ideas represented in this blog post are exclusive to Resham, and do not represent those of any other third party.