What you need to know from the 2015 budget

As you probably already seen on the news, our current Chancellor George Osborne delivered our budget to parliament on 18^th March 2015. However, in what may come as a surprise, a lot of people are unaware what the budget actually is. Simply put, the budget is a plan on how the government will spend the country’s money for the next 12 months. This is an annual process and is always conducted by the Chancellor of the Exchequer.  The government will decide how much they are going to spend, and on what services they are going to spend it on: housing, schools, and hospitals, defense etc.

Why the red briefcase?

Traditionally, the chancellor will be carrying a red briefcase every year as they are about to make their budget statement on TV. The original briefcase was used by William Gladstone in 1860.  However in 1997, Gordon Brown former Chancellor had replaced it as the existing one was too old.

Where does the money come from?

The government receives the money from taxes. There are different types of taxes the government receives for the budget; our income tax, VAT (Value added tax) and duties (extra taxed charged on certain things such as alcohol, tobacco and petrol)

Budget 2015

Find out the key points of the Budget 2015:

Economy

• £1.25 billion Will be spent on children’s mental health services– this will be helping more than 110, 000 people.
• Faster mobile networks and broadband -the government is investing up to £600 million, and these services should become available to nearly all UK premises in the country.
• Increased support for gas and oil sectors –The gas and oil industry provides skilled jobs and benefits the UK economy. The government are going to introduce a new investment allowance and are also going reduce supplementary tax and reduce the rate of petroleum revenue tax on oil and gas companies. This reduction in taxes will show a 15% increase in oil production by 2019.
• Minimum wage – will be rising to £6.70 from October 2015
• A new pound – 12 sided pound coin is unveiled.

Pensions

• Annuity freedom– An annuity will allow you to convert your pension savings into a regular income that will last for the rest of your life. Currently, people who have purchased an annuity are unable to sell it without having to pay at least 55% tax on it.  The Chancellor has confirmed that pensioners will be allowed to sell their annuity contracts for cash from April 2016 without having to pay any tax charges.
• Lifetime allowance – This a limit on the total value of pension benefits that you can build without facing a tax charge. The government have announced that they will reduce lifetime allowance from £1.25m to £1m.

Tax

• Rise in tax-rate threshold – The Chancellor announced that the basic rate will rise to £31,900 in 2016 – 2017, in other words, if anyone whose income is above £42, 700 will pay 40% tax. In 2017-2018, the tax threshold will be due to increase again to £43,300.
• Annual paper tax returns to be abolished and to be replaced by digital accounts.
• Bank levy (bank tax) increased to 0.21 %, starts from April 2015 and will raise an additional £900 million a year.

Savings

• This April, the first £1000 of interest earned on savings will be tax free.
• Help to buy ISA – The government have already helped thousands of people buy a home with help to buy. This allows people to buy a home with just a 5% deposit. The government are now introducing help to buy ISA, this will allow people to open an ISA (Independent Savings Account) and for every £200 you put in, the government will also put in £50.

With just a few weeks until the new financial year (April 6^th) begins the budget is now announced and is ready to be implemented. The budget has an impact on every part of our lives from buying food, putting petrol in your car, smoking, drinking and everything else in between.