Chancellor George Osborne delivered the first Budget for the new government since elections in May. A number of points were announced today, stating that “This will be a Budget for the working people” and “Britain deserves a pay rise”.
But what does the 2015 Summer budget mean for families? We summarise the key points of the budget for families and how they will be affected:
Personal Allowance – From April 2016, the tax-free personal allowance will be raised from £10,600 to £11,000, and to £12,500 by 2020.
Higher-rate Threshold increased – From April 2016, the higher (40p) rate threshold will increase from £42,385 to £43,000.
Free Childcare – From September 2017, all working parents of 3 to 4 year olds will receive up to 30 hours a week of free childcare.
Tax Credit/Universal Credit for multiple children – Families who have a third or subsequent child after April 2017 will not receive additional Tax Credit or Universal Credit support. There are some exceptions, such as multiple births, from the limit.
Inheritance Tax – From 2017, an allowance of up to £175,000 for a family home will be phased in from 2017-2018 for those who leave their homes to their children or grandchildren. This is on top of the existing £325,000 Inheritance Tax threshold. This will bring the transferrable tax-free allowance from both parents in a married couple or civil partnership to £1m.
New National Living Wage – From April 2016 a new National Living Wage of £7.20 an hour for over 25s. This will rise to £9.00 an hour by 2020.
Benefits Cap – The maximum amount of benefits that can be claimed is capped at £23,000 per year in London and £20,000 for the rest of the country.
Working age benefits freeze – Working-age benefits, including tax-credits and housing allowance will be frozen. However, there are a few exceptions like maternity pay and disability benefits.
Changes for the family car – Fuel duty remains frozen for the rest of the year. New cars and motorcycles will not need MOT for the first four years. From 2017, new Vehicle Excise Duty (VED) bands will be introduced for new cars due to lower emissions – no change in VED for existing cars.
Student Loans – Maintenance loans will replace student grants, and will be paid back only when graduates earn above £21,000 a year. From the 2016-17 academic year, cash support for new students increased by £766 to £8,200 a year.
Housing Benefit – 18-to-21 year olds will no longer have automatic entitlement to housing benefit, and must “earn or learn”.
Apprenticeships – 18-to-21 year olds will need to apply for an apprenticeship or traineeship, gain work-based skills, or go on a work placement, in order to continue to receive Universal Credit.
Do you feel that you will be better off or worse off after the budget announcements? Tell us in the comments below.