Summer Budget 2015

The Chancellor has presented his Summer Budget to Parliament, the first for a majority Conservative government since November 1996 – here’s a summary of what was announced:

Individuals

• A new national living wage will be introduced for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020.
• Inheritance tax threshold to increase to £1m, phased in from 2017, underpinned by a new £325,000 family home allowance.
• The tax-free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016.
• The amount people will have to earn before they pay tax at 40% will increase from £42,385 in 2015-16 to £43,000 in 2016-17.
• Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017.
• Income threshold for tax credits to be reduced from £6,420 to £3,850.
• Working-age benefits to be frozen for four years – including tax credits and local housing allowance, but maternity pay and disability benefits exempted.
• The amount people can contribute to their pension tax-free to be reduced for individuals with incomes over £150,000.
• Rent-a-room relief scheme to rise to £7,500.

Business

• Corporation tax to be cut to 19% in 2017 and 18% in 2020.
• Dividend tax credit to be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax to be set at 7.5%, 32.5% and 38.1%.
• Annual investment allowance will be fixed permanently at £200,000 from January 2016.
• National Insurance employment allowance for small firms to be increased by 50% to £3,000 from 2016.
• New apprenticeship levy for large employers.