Earlier today chancellor George Osborne set out the government’s monetary plans.
Whilst there has been some speculation about what would be included, here is a summary about what it means for you and your money.
The amount of income people can earn before they start paying income tax – known as the personal allowance – is rising. For basic rate taxpayers it will go up to £11,000 and will rise again to £11,500 in 2017. This change is expected to reduce the amount of tax paid buy £180 per year for basic rate taxpayers, compared with the current personal allowance of £10,600.
For higher rate taxpayers the threshold will rise to £43,000 and then to £45,000 in 2017. Further to this, there has been a promise to raise the personal allowance to £12,500 and raise the threshold for higher rate tax to £50,000 by 2021.
If you are self employed the government has said that the abolition of the Class 2 National Insurance contribution will save you around £130 a year.
Pensions and Savings
Some good news for savers as the Annual Isa limit will be increased from £15,240 to £20,000. There is also a new ‘lifetime’ Isa if you are under 40. For every £4 you save the government will put in an extra £1. If you save a maximum of £4000 towards a home deposit or retirement, you will get a £1000 top-up from the government every year until you turn 50.
Fuel, Alcohol and Tobacco
Good news for drivers as fuel duty will be frozen at 57.95p for the sixth year running. The duty on beer, cider and spirit will also be frozen. Not great news for smokers as excise duties on tobacco is to rise 2% above inflation.