/ Money

What does the Summer Budget mean for you?

Budget bag

This afternoon, the Chancellor delivered his second Budget speech of 2015 – and the first of a wholly Conservative government for nearly 20 years. So what is in it and how will it affect you?

There were a number of consumer concerns mentioned, from inheritance tax to personal allowances.

Increased personal allowance

The measure that hit the headlines was the introduction of a new national living wage, starting at £7.20 an hour from next April.

And there was also the widely anticipated increase in the personal allowance – how much you can earn before you start paying tax. This will be up to £11,000 next year, and there is also a rise in the threshold at which people start to pay the higher 40p rate of tax – up to £43,000.

Inheritance tax

In a move that will be welcomed by many, the Chancellor increased the inheritance tax allowance.

From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18.

The family home allowance will be added to the existing £325,000 inheritance tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21.

So if you own a property that’s worth up to £1m, by 2021 you will be able to leave it to children or grandchildren completely free of inheritance tax.

Nuisance calls

Meanwhile if you are one of 220,000+ supporters of our Calling Time campaign – or one of those who have told us your stories of being plagued by nuisance calls – you’ll be interested in this one.

There is a new proposal to cap the amount that claims management companies (often behind the payment protection insurance or accident claims calls) can charge their customers. The idea is to try to reduce the number of nuisance calls you as receive as potential customers.

Over the next week, politicians and policy folk will pore over the details. But what do you think of the major announcements? Has the Government done everything it can to help you and your finances?

John Humphreys says:
9 July 2015

The paragraph regarding Inheritance Tax above is incorrect, a married couple will be able to leave a property valued at £850,000 to their children or grandchildren from April 2017; made up of £325,000 of Nil Rate Band each and a further £100,000 each of main residence relief. The £1m property value that could be left to children or grandchildren Inheritance Tax free by a couple will not be reached until the 2020-21 tax year, when the phasing in of the main residence relief is completed

The detail is correct when you click on the link to take you through to a more detailed analysis, but this page ought to be altered as it is incorrect.

Hi John, yes you’re right and thanks very much for getting in touch. Apologies for the error. We’ve now amended the story.

The new £million Inheritance Tax allowance only applies to half of the UK population as it discriminates between married and single people, especially divorcees with children. Since new figures show that half of the UK population are now either single or divorced it is these people (and, more importantly their children) who by no other reason than preferring to stay single who are missing out by being unable to pass on their inheritance allowance to their living spouse upon the death of one partner and by only gaining an extra £175,000 (applicable by 2020) over the £325,000 already allocated. Although welcome, it is ultimately the children of divorced parents who will lose out through absolutely no fault of their own.

When the Chancellor said both [IHT] allowances “can be transferred to your spouse or partner” I am not sure whether the word ‘partner’ refers exclusively to civil partners or includes people who live together and act as partners but have elected not to formalise that with a marriage or civil partnership. Equally I don’t know whether the Marriage (Same Sex Couples) Act 2013 means that the status of civil partnership will still be available for new same sex couples who choose not to enter a marriage. This relates to England & Wales – Scotland has equivalent legislation but Northern Ireland does not. The Chancellor’s words must surely embrace all who have formally married or entered into a civil partnership but not necessarily those who technically remain single. I wonder if this will be clarified in the near future.

Silly me I was naive enough to take the link to the Which “calling time campaign” thinking it was a petition or something. I found it involves recording the name of the troublesome company making cold calls in the hope someone will do something about them. Which I very much doubt will happen anyway.
It’s going nowhere is it?
Especially as most are overseas calls anyway.
To record all the cold call companies, and that won’t even be possible for most of them, is more of a chore than the cold call types are causing themselves.

How about a campaign to make it law that cold calls are illegal unless the bill payer actually “opts in”. Make “opt out” the default rather than the current requirement where we’re “opted in”, and where “opting out” doesn’t work anyway.
How about legislating to give private lines the facility to block (or unblock as required) overseas calls where most of these calls seem to come from?

What is so difficult about that?
What is so difficult about giving people facilities they actually want?
What is so difficult about actually campaigning towards these goals?

Many commentators (among others IFS director Paul Johnson and BBC Economics Editor Robert Peston) say that very many folk should be better off thanks to eg the national living wage, but in reality will be worse off because of benefit cuts. The Tory Chancellor giveth and the Tory Chancellor taketh away.

(I’m in an uncomplicated situation and will be better off thanks to the increased personal allowance.)

Sophie, I heard some of the discussion with the IFS yesterday and he admitted they had not taken all the factors into consideration, including, among others, extended free childcare. I am wary of knee-jerk comments before the implications are fully digested and understood.

I am not in favour of wages being subsidised by the state – providing those who are genuinely in need of help are able to get it. To me that is what a welfare state should be about.

I recently watched a TV programme about immigrants and benefits.

2 of the claimants were men from Eastern Europe working here on low wages whose families remained at home. A Romanian was claiming benefits here and sending the money home to pay the wages of 2 men to renovate his home. When his employees had finished his renovations, he was going to bring them here and help them to exploit the benefits system. A second man sent the money home and it enabled his wife to set up a restaurant.

I am also not in favour of wages being subsidised and think the benefits system needs a good overhaul and the minimum wage needs to be a liveable wage for full time employment.

It is often overlooked that many people have a low income because they can only work 20, 25 or 30 hours a week, either because they have other commitments that prevent them working more hours, or because the only employment available in their area is shift work or part-time employment. There is not much the tax or benefit system can equitably do to remedy this but the government has a duty to create the economic conditions across the nation whereby there is a range of employment types to suit the skills and availability of the local population. This will not be easy in rural areas or where a major traditional industry has declined or disappeared. Where I live in Norfolk there is virtually no full time work available for young people or women of any age without a degree or professional qualification. The consequence is that a large number of people will never be able get a full ‘living wage’ even if they are on a relatively high hourly rate.