2015 Budget: At A Glance
Published: 08 July, 2015
The first Conservative-only Budget since 1996 was delivered today by the Chancellor of the Exchequer, George Osborne.
Addressing the House of Commons, Mr Osborne described it as "a budget for working people, to build a strong economy".
Adding that the UK economy is "fundamentally stronger" than it was five years ago, Mr Osborne nevertheless said the UK still didn't train enough or build enough, but that this Budget would be a "big budget for a country with big ambitions".
According to the Office for Budget Responsibility (OBR), the UK economy grew by 3% last year, and is predicted to grow a further 2.4% this year. Forecasts then outline 2.3% growth in 2016, 2.4% growth in 2017, with "strong and steady growth" continuing through to the end of the decade.
The Chancellor outlined plans to tackle the deficit and create a Budget surplus by 2019/20, as well as ambitions to create 2 million more jobs "on the road to full employment".
In order to reduce the deficit, the Budget set out £17 billion in spending cuts, with plans for a further £17 billion in cuts to be detailed this Autumn. Some £12 billion of this will come from the welfare system, with a further £5 billion from a crackdown on tax avoidance and evasion. Welfare reforms include caps to benefits, the requirement for 'wealthy' social housing tenants to pay market-rate rents, and sweeping reforms to the tax credit system.
Key measures announced in the Budget, which are likely to impact the construction industry, include:
- A rise in Insurance Premium Tax to 9.5% from November 2015
- The inheritance tax threshold will be increased through a new allowance, meaning people will be able to pass on estates worth up to £1m without paying the tax
- Corporation Tax will be cut to 19% in 2017, and 18% by 2020.
- The personal income tax allowance will rise to £11,000 next year, and will then always rise in line with inflation. The higher rate threshold will rise to £43,000 next year.
- A new National Living Wage will be introduced for the over-25s next year. It will start at £7.20 per hour, and rise to £9 per hour by 2020.
- Mr Osborne also announced a ‘tax lock’, which will legislate to set a ceiling for the main rates of income tax, the standard and reduced rates of VAT, and National Insurance Contributions, to ensure they cannot rise above their current 2015/2016 levels. There was no mention of whether this will impact on the recent European Court of Justice ruling that the UK’s 5% reduced rate of VAT for energy efficiency measures is illegal.
- From 2017, a Vehicle Excise Duty tax will be created specifically for new cars. It will have three bands depending on the type of vehicle, with the revenue generated being used to create a Roads Fund to help improve and upgrade the UK’s roads from the end of the decade.
- Fuel Duty will be frozen for the rest of this year, as previously announced.
Skills and Education
- The government will create 3 million more apprenticeships, funded by an ‘Apprenticeship Levy’ on all large firms. The Chancellor said those businesses who take on apprentices will be able to claim back more in terms of funding for apprenticeships, than they put into the levy.
Building and Energy
- There was no direct mention of housebuilding, energy efficiency, the Renewable Heat Incentive or the Green Deal, but Mr Osborne did outline plans to restrict mortgage tax relief for buy-to-let landlords to the basic rate, and to raise the Rent-A-Room tax relief threshold to £7,500.
- Further planning reforms will be announced on 10 June, according to the Chancellor.
- Renewable electricity will no longer be exempt from the Climate Change Levy.