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Now that the dust has settled on the Budget 2015…

What does it actually mean for individuals?

The Minimum Wage

The current rate for people over 21 is £6.50 p/h.  The new rate in 2016 will be the ‘living wage’ for those over 25 and will be set at £7.20 from April 2016 rising to £9.00 by 2020. At this stage it is unclear how the changes will impact those under 25.

Personal Allowance

The personal allowance this year is £10,600. This will increase next year to £11,000.  The aim is to ultimately increase the personal allowance to £12,000.

In addition the tax threshold for paying higher rate tax has increased to £42,385 and is set to continue to increase to £43,000 next year.

Tax credits

These will be much less generous with a number of ways in which the system will be tightened up.  The amounts given are being frozen for four years, and the rate at which they reduce as your income increases is being accelerated.

In particular, the changes to tax credits that relate to having more than two children don’t come in until 2017.  Even then you will only be affected if you have a child born after 6 April 2017 or if you are making a new claim. If you are already receiving tax credits for a larger family this won’t be affected so long as there is no break in your claim.

In the same way, the axing of the ‘family element’ of child tax credits – worth a little over £500 currently – will only affect new claims after 6 April 2017.

Inheritance Tax

There are also changes to inheritance tax which effect estates valued at under £2 million. This  will allow you to have the current £325,000 limit plus £175,000 for your house.  These allowances are transferable between married couples giving £1,000,000 per family. This will be phased in between now and 2020/2021.

Annual Investment Allowance

This will increase to £200,000 for the foreseeable future.  Previous announcements would have reduced this to £25,000 from January 2016.  This means for small companies they can write off most fixed asset purchases in the year of acquisition.


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