Today, George Osborne has delivered his post-election Budget; it is the first by a totally Conservative party since 1996. The Chancellor has outlined the Government’s long term fiscal plans, ambition for a budget surplus and additional important factors that could affect you as a contractor and your take home pay.
Osborne declared this as “a Budget that puts security first and recognises hard-working British people”.
How does he plan to support hard-working people? Our blog breaks down the Budget:
The government wants to continue supporting small and medium size businesses. They have committed to reducing Corporation Tax to 19% by 2017 and a further 1% by the end of the decade.
This means limited company directors will see an increase in their take home pay in the coming years with these measures. The Chancellor emphasised that “Britain is open for business”.
The Chancellor explained that families who have worked hard to purchase their own homes should not be penalised when passing these on to their children or spouse. The total Inheritance Tax Allowance will be raised to £1m and this comes as positive news for many families.
Raise the Personal Tax Allowance:
Currently at £10,600, by April 2016 the Personal Tax Allowance will have increased to £11,000. The Government plans to increase this to £12,000 to further assist in increasing incomes for all working individuals. The Allowance is set to rise in line with wages.
Increased Threshold for Higher Rate Tax:
With effect from April 2016 the threshold for the 40p tax rate is set to increase to £43,000 enabling workers to earn more before Higher Rate Tax is applied to their income.
A long term pledge to raise this to £50,000 is welcome news for many workers in the UK, but especially contractors. This “Budget for working people” aims to eliminate the pressure and burden of the top rate of tax being applied to middle income earners as of next year.
Other good news:
• Fuel duty remains frozen.
• Long term aim is to reduce the deficit.
• The Government plans to raise a budget surplus.
• The National Living Wage for over 25s will rise to £7.20 in April 2016 and is set to increase to £9.00 by 2020.
Read our in-depth breakdown of the Summer Budget.
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See more recent news on Budget changes and updates in our latest Autumn Statement blog.