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Friday 3 July 2015
Friday 3 July 2015
Friday 3 July 2015
Friday 3 July 2015
On 8th July 2015, George Osborne will deliver the first fully Conservative budget since Kenneth Clarke’s in 1996. Given that Osborne already delivered a budget in March 2015, you may be asking, “Why do we need another budget now?”
The reason is that the March budget was a product of the Tory-Lib Dem coalition, while this budget will reflect the Conservatives’ own agenda. Some may also note that Labour lost its former shadow chancellor, Ed Balls, in the general election, potentially weakening their ability to challenge Tory proposals.
This "emergency budget" is being delivered at speed, but will it be radical? Let’s look at the key areas:
1. Getting the UK Back Into the Black
The Conservatives have pledged to get the UK out of debt through spending cuts and encouraging economic growth.
Key Spending Cuts:
Housing Benefit for 18–21 Year-Olds: This could be removed to reduce welfare expenditure.
Reduction in the Benefits Cap: Currently at £26,000 per year, the cap could drop to £23,000 per year.
2. Pensioners Likely to Be Protected
The Conservatives have committed to maintaining the triple-lock system for pensions:
The state pension will rise by the highest of:
Inflation
Average earnings
2.5%
However, higher earners are likely to face reductions in pension tax relief.
3. Housing: A Key Focus
Housing remains a significant area in the budget, with policies aimed at both existing homeowners and first-time buyers.
Raising the Inheritance Tax Threshold
The threshold will rise from £325,000 to £1 million.
This increase aims to counteract rising house prices, which have pushed more families into paying inheritance tax since the limit was set in 2009.
The increase is designed to protect middle-income families while focusing inheritance tax on the wealthiest households.
Help to Buy ISA for First-Time Buyers
The government will add a 25% bonus to savings for first-time buyers.
For example:
Save £12,000, and the government adds £3,000.
Couples buying together can each open an ISA, effectively boosting their deposits by up to £6,000.
4. A Budget for Working People?
The Conservatives aim to support working individuals by increasing tax allowances:
Personal Allowance:
The tax-free personal allowance currently stands at £10,600.
It is set to rise to £12,500 earlier than planned.
Higher Rate Tax Threshold:
The starting rate for the 40% tax bracket will rise from £42,385 to £50,000.
These changes mean individuals keep more of their income, reducing Treasury revenue but aiming to boost economic growth through higher consumer spending.
What Does This All Mean?
While the full impact of the budget will only become clear once implemented, its core principles mirror those of the coalition budget – unsurprising, as the Conservatives were the dominant partner.
The focus on:
Spending cuts
Support for first-time buyers
Tax breaks for working people
reflects the Tory commitment to balance the budget deficit while boosting economic growth.
Whether these measures are seen as radical or merely pragmatic depends largely on perspective.
Final Thoughts
The 2015 Conservative budget signals a clear agenda of fiscal responsibility, support for working families, and targeted relief for middle-income households. The Help to Buy ISA and tax threshold increases aim to put more money in individuals’ pockets while ensuring government spending remains under control.
Important Note
“YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.”
On 8th July 2015, George Osborne will deliver the first fully Conservative budget since Kenneth Clarke’s in 1996. Given that Osborne already delivered a budget in March 2015, you may be asking, “Why do we need another budget now?”
The reason is that the March budget was a product of the Tory-Lib Dem coalition, while this budget will reflect the Conservatives’ own agenda. Some may also note that Labour lost its former shadow chancellor, Ed Balls, in the general election, potentially weakening their ability to challenge Tory proposals.
This "emergency budget" is being delivered at speed, but will it be radical? Let’s look at the key areas:
1. Getting the UK Back Into the Black
The Conservatives have pledged to get the UK out of debt through spending cuts and encouraging economic growth.
Key Spending Cuts:
Housing Benefit for 18–21 Year-Olds: This could be removed to reduce welfare expenditure.
Reduction in the Benefits Cap: Currently at £26,000 per year, the cap could drop to £23,000 per year.
2. Pensioners Likely to Be Protected
The Conservatives have committed to maintaining the triple-lock system for pensions:
The state pension will rise by the highest of:
Inflation
Average earnings
2.5%
However, higher earners are likely to face reductions in pension tax relief.
3. Housing: A Key Focus
Housing remains a significant area in the budget, with policies aimed at both existing homeowners and first-time buyers.
Raising the Inheritance Tax Threshold
The threshold will rise from £325,000 to £1 million.
This increase aims to counteract rising house prices, which have pushed more families into paying inheritance tax since the limit was set in 2009.
The increase is designed to protect middle-income families while focusing inheritance tax on the wealthiest households.
Help to Buy ISA for First-Time Buyers
The government will add a 25% bonus to savings for first-time buyers.
For example:
Save £12,000, and the government adds £3,000.
Couples buying together can each open an ISA, effectively boosting their deposits by up to £6,000.
4. A Budget for Working People?
The Conservatives aim to support working individuals by increasing tax allowances:
Personal Allowance:
The tax-free personal allowance currently stands at £10,600.
It is set to rise to £12,500 earlier than planned.
Higher Rate Tax Threshold:
The starting rate for the 40% tax bracket will rise from £42,385 to £50,000.
These changes mean individuals keep more of their income, reducing Treasury revenue but aiming to boost economic growth through higher consumer spending.
What Does This All Mean?
While the full impact of the budget will only become clear once implemented, its core principles mirror those of the coalition budget – unsurprising, as the Conservatives were the dominant partner.
The focus on:
Spending cuts
Support for first-time buyers
Tax breaks for working people
reflects the Tory commitment to balance the budget deficit while boosting economic growth.
Whether these measures are seen as radical or merely pragmatic depends largely on perspective.
Final Thoughts
The 2015 Conservative budget signals a clear agenda of fiscal responsibility, support for working families, and targeted relief for middle-income households. The Help to Buy ISA and tax threshold increases aim to put more money in individuals’ pockets while ensuring government spending remains under control.
Important Note
“YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.”
