Now that the Chancellor has announced his first Budget since May’s General Election, a few things have become clear. And many of us are likely to be affected in different ways, from income tax to benefits, from housing to savings.
Some of the headlines from Summer Budget 2015 were:
From 2017, couples can expect to see their inheritance tax threshold increase to £1 million, from the previous £650,000. It comes as part of a new ‘family home allowance’ of £175,000 added to the present £325,000 tax-free allowance, which means that if you die and leave assets worth up to £500,000, your estate won’t be charged any inheritance tax.
Subsidised rent for high earners has been one of the main areas this budget has focused on. Local authority or housing association tenants who earn £40,000 or more a year in London, and £30,000+ outside London, will have to pay a rent that is near market or full market rate from 2017/18 – a move the Government say will save taxpayers £250m a year. However, rents in the social housing sector are to be be reduced by 1% a year, for the next four years.
The tax-free personal allowance (how much you can earn before you start paying income tax) will rise from £10,600 in 2015/16, to £11,000 from April 2016. In addition, the 40p tax threshold is set to rise from its current level of £42,385 to £43,000, going up to £50,000 by 2020.
Much has been said and written about the need to find £12bn in benefit cuts in the next two years. In this budget, the benefits cap per household is falling – in London, from £26,000 to £23,000 and elsewhere in the UK (where the cost of living is generally lower) to at least £20,000.
A new national living wage is being introduced for over-25s next year, which will start at £7.20/hr with the aim of rising to £9/hr by 2020.
Child tax credits look set to be limited to just two children per household for new claimants, while housing benefits look set to be scrapped for 18-21-year-olds who are also claiming jobseekers’ allowance. The Prime Minister has said he wants to stop the ‘merry-go-round’ of taxing low earning people and then handing it back.
Some families and individuals may need to budget tighter than ever before. Your own financial behaviour could also affect your credit rating. Having a good credit score could help you apply for a better mortgage rate, credit card and loans.
The Experian Credit Score is a guide to help you understand your Experian Credit Report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now, and can give you an indication of what kind of deal you might get.
Thanks to Catherine Fiddis for additional reporting