Government News
Budget 2015
CIPP summary of Budget 2015 18 March 2015
“The Budget for Britain - the comeback country”. The Chancellor finished off his last budget speech of this parliament with confidence.
With 50 days to go until the General Election, today’s Budget announcement was certainly in part a campaign for the big day on 7 May. Many comparisons were made to where the UK’s economy was in 2010 when the coalition was formed and where it is now, with bold words from the Chancellor that Britain is walking tall again and this Budget is one more big step on the road from austerity to prosperity. "Out of the red and into the black, Britain is back and paying its way in the world today" - something that payroll professionals know all about. The original debt target set out in his first budget 5 years ago has been met and we heard about the sun starting to shine and how we are fixing the roof. Not once did we hear this, but twice when stating that the church roof repair fund is to be more than trebled.... “We are not the only ones who want to fix the roof while the sun is shining.” A vision of the end of a Morecambe and Wise show comes to mind with the infamous red budget book under one arm! Which one is David and which one is George? Can we forgive Mr Osborne for his out and out party plugs such as “Ten pounds off a tank with the Tories”? Perhaps we can as we are promised yet another fuel duty freeze in September. We are also to see a penny off a pint for the third year in a row, and a 2% cut for spirits and most ciders, and a freeze on duty on wine. A record number of people are in work, meaning a record number of people being served by the payroll profession! 80% of jobs are full time and 80% are skilled and with unemployment at 5.3% the claimant count is at its lowest rate since 1975. Although we heard more strap lines like the squeeze on public spending ends a year earlier than planned, hold back the party poppers as all resources will continue to go towards reducing our national debt. A further £30 billion must be saved by 2017/18 for ‘austerity’ to end by 2019; £13 billion to come from government departments, £12 billion from welfare and £5 billion from tax avoidance, evasion and aggressive tax planning. The policy team will now start to read the 100 plus page document and advise members of other nuggets they find. CIPP comment Is it just policy or does there seem to have been lots of tax relief/cut messages but with very little to happen from 2015? From a payroll perspective we can all breathe a sigh of relief in that our payroll software doesn’t have to make any last minute changes, but depending on who wins the election we will have plenty to occupy us from 2016. With the DWP and HMRC potentially in the firing line for further cuts it will be important that for Mr Osborne’s planned tax initiatives to work he invests in HMRC resource, not cut any more. Especially given that real time information has helped the DWP to reduce benefit fraud even further; one for the payroll industry we think! The tax-free personal allowance is being increased in April 2017, to £11,000. To make work pay and ensure families keep more of the money they earn, the tax-free personal allowance will rise to £10,800 in 2016-17, and £11,000 the year after, the Chancellor said proudly. The increases to the personal allowance from £6475 in 2010, to £11,000 in 2017-18 will according to HMRC save a typical taxpayer £905. To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the government will also increase above inflation the point above at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18 - taking it to £43,300 in 2017-18. From 2016 to 2017, there will be one Income Tax personal allowance regardless of an individual’s date of birth. The National Insurance upper earnings and upper profits limits will increase to stay in line with the higher rate threshold. CIPP comment The CIPP welcomes the increase in the Personal Allowance; it especially welcomes the news of the higher rate thresholds being increased to reflect the rise and above inflation. The Chancellor also said should the Conservatives be elected the Personal Allowance would rise further to £12,000pa with the 40% threshold rising to £50,000. A most welcome prospect for all the now deemed “middle earners”. Also having just one Personal Allowance, regardless of age will certainly help simplify people’s understanding of their entitlement. Personal Allowance and basic rate limits
CIPP Policy News Journal
25/04/2016, Page 162 of 453
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