Today’s Summer Budget Statement, the first from a wholly-Conservative Government in almost 20 years, saw George Osborne turn his attention to the UK’s Savings Gap.
Continuing the themes set out in his April Budget, the Chancellor announced that “Britain isn’t saving enough.” We were encouraged to hear this phrase, as it’s something we’ve campaigned hard for at our meetings at Westminster and through our Tackling the Savings Gap research. Over 12,000 Britons have responded to our quarterly surveys to date, and that one message is crystal clear. Thankfully, George Osborne has listened.
Alongside the previously announced ‘Help to Buy ISA’, the Chancellor spoke of his willingness to consider “radical” pension reform, including treating pensions more like ISAs. This is another idea that we’ve campaigned for and are looking forward to contributing further to the consultation and ultimately, the outcomes.
There were also further changes announced to personal tax allowances:
- The basic rate of income tax will rise to £11,000 next year and will reach £12,500 in the long-term
- The higher rate of income tax will rise to £43,000 from April and move towards £50,000 over time
These measures are expected to lower taxes for 29 million working people, meaning they will have more money to put towards their long-term savings. We know that most Britons aren’t saving enough for the retirement they want, so diverting this extra money can begin to close that gap.
The Chancellor also made some other key announcements:
- The Inheritance Tax threshold will increase to £1m for married couples from April 2017
- Those earning over £150,000 will have their pension tax relief allowance tapered from £40,000 to £10,000 a year
- Dividend Tax Credit will be replaced by a £5,000 tax-free dividend allowance
- Dividend rates are going up to 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers
- A new ‘National Living Wage’ will replace the Minimum Wage and will increase to £9 per hour by 2020
We’re pleased that the Chancellor is getting behind what we see is one of the biggest issues that Britain faces. We’re confident that today’s announcements and the reforms from the Spring Budget will go some way to helping address the Savings Gap, but there’s still more to do.
We will continue to campaign at Westminster for simpler products, more flexible savings and better financial education for all.
For more information on the Summer Budget 2015, visit https://www.gov.uk/government/topical-events/budget-2015
This article is based on True Potential’s interpretation of the Summer Budget 2015 Statement published on 8 July 2015. It is a broad summary and cannot cover every nuance, you should not take or refrain from taking any action based solely on this article.
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