Budget 2015: what we know so far
The final Budget before the General Election is almost upon us.
George Osborne, the Chancellor of the Exchequer, will deliver the Budget on Wednesday 18th March 2015.
It will be the final Budget before the General Election on 7th May, and Osborne's sixth as Chancellor.
He has already warned that there will be no "pre-election giveaway", but given its proximity to polling day it seems inevitable that there will be some form of eye-catching announcement to tempt voters.
Indeed, in an interview with the Financial Times, the Chancellor said a major reform was planned.
However, he will also be keen to present a "fiscally neutral Budget" to continue the Government's austerity message.
Here are some changes that might be coming.
Income Tax personal allowance
This Government has made it its mission to consistently increase the tax-free Income Tax Personal Allowance and so it wouldn’t be a surprise to see this continue in the Budget.
It’s due to rise to £10,600 in April but it might well be pushed past the £11,000 mark and/or extended to £12,500 by the end of the next Parliament in 2020.
Annuities
It has been confirmed that the Government wants to allow pensioners to sell their annuities to insurers from April 2016. This would be an attempt to offer some sort of parity to retirees who miss out on the pension reforms coming in April.
It was first proposed by Pensions Minister Steve Webb back in January and a consultation will be launched on Budget Day.
Experts have been quick to warn about the danger of people selling up, getting a poor deal and then running out of money.
Get on top of your own budget with lovemoney.com's free, secure Track service
Pension saving
Some tax experts believe the Government may cut or even withdraw Income Tax relief on pension contributions for higher and additional rate taxpayers.
This would boost Treasury coffers but many predict it won’t happen as it will alienate core Conservative voters.
Latest rumours suggest the Chancellor will instead further reduce the lifetime allowance for pension saving from its current limit of £1.25 million down to £1 million. This would hit people who are saving for pensions over long time periods, for example public sector workers and those with final salary pensions from early on in their careers, as well as the wealthy. It would, however, also trump a potential similar manifesto pledge by Labour and raise money to pay for an Income Tax cut.
Alcohol duty
It’s been widely rumoured that beer duty will be cut, by 1p or 2p a pint, which would cheer core Conservatives who have pushed for it as part of a wider campaign to prevent more pub closures.
There may well be a reduction in duty on spirits too, with some sources saying it could be cut by up to 16p, while it's rumoured wine duty will be frozen. These would be pre-election giveaways that wouldn’t cost a fortune.
Tax returns
The paper tax return is set to be scrapped in favour of a new digital account which can be checked anytime. Taxpayers can submit information and HM Revenue & Customs can also add information it receives from employers, banks and pension companies.
The new system is likely to be introduced in 2020.
Inheritance Tax
The Conservatives are thought to be putting together an election manifesto pledge to remove Inheritance Tax from properties worth up to £1 million and reduce it on properties up to £2 million, according to papers seen by the Guardian. However, this isn't likely to feature in the Budget as it's opposed by the Liberal Democrats.
Pensioner bonds for all?
The success of the 65+ Guaranteed Growth Bonds (or ‘Pensioner Bonds’ if you prefer) has led to calls for other Government-backed savings products. So there could be something for younger pensioners, who were excluded from the 65+ Bonds, or a different group entirely.
ISAs
In the Autumn Statement, it was announced that ISAs could pass to a person’s spouse or partner on death. There have been calls for this to be extended to children as well, and this may well be announced.
There are also likely to be further details on how peer-to-peer lending, where people lend money to others via a third party, will be included in ISAs in the future. Peer-to-peer lending is consistently providing people with higher returns than traditional savings accounts so many people will be keen to see it offered as a tax-free investment.
Savings tax scrapped?
The Independent is reporting that Osborne may abolish the tax on savings income for basic rate taxpayers, which is currently taxed at 20%. However, news reports have suggested the Treasury is already talking down the chances of this appearing in the Budget speech.
Minimum wage
The Government has already announced that the National Minimum Wage will be increasing by 20p to £6.70 an hour from October.
We'll be updating this page as more details about what might be in this year's Budget are revealed.
Get on top of your own budget with lovemoney.com's free, secure Track service
More from lovemoney.com:
The fake solicitor scam epidemic
Comments
Be the first to comment
Do you want to comment on this article? You need to be signed in for this feature