July 2015 Budget In Brief

8th July 2015

The state of the economy.
Economy grew by 3% in 2014.
2.4% growth forecast in 2015, the same as predicted in March, followed by 2.3% and 2.4% in the two following years
1 million extra jobs predicted to be created by 2020

Public borrowing/deficit/spending
Deficit to be cut at same pace as during last Parliament - securing a budget surplus a year later than planned in 2019-20
Borrowing set to fall from £69.5bn this year to £43.1bn, £24.3bn and £6bn before hitting a £10bn surplus in 2019-20
Debt as a share of GDP to fall from 80.3% this year to 79.1%, 77.2%, 74.7%, 71.5% and 68.5% in successive years
1% public sector pay rise to continue for next four years
£37bn of further spending cuts by 2020, including £12bn of welfare cuts and £5bn from tax avoidance

Welfare and pensions
Working-age benefits to be frozen for four years - including tax credits and local housing allowance
Rents in social housing sector will be reduced by 1% a year for the next four years
Higher-income households in social housing will be required to pay rents at the market rate
Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017
Reduce earnings level for tax credits withdrawal from £6,420 to 3,850.
Disability benefits will not be taxed or means-tested
18-21-year-olds will not be entitled to claim housing benefit automatically, with a new "earn to learn" obligation
Employment and Support Allowance payments for claimants deemed able to work to be "aligned" with Jobseeker's Allowance for new claimants
State pension triple lock to be protected
Green Paper published on proposals for "a radical change" to pension saving system
Annual tax relief on pension contributions to be limited to £10,000 a year

Alcohol, tobacco, gambling and fuel
No rise in fuel duty with rates continuing to be frozen
Major reform to vehicle excise duties to pay for a new road-building and maintenance fund in England
New VED bands for new cars to be introduced from 2017, pegged to emissions - 95% of car owners will pay £140 a year.

Personal taxation and pay
Introduction of a new national living wage for all workers aged over 25, starting at £7.20 from April 2016 and set to reach £9 an hour by 2020
Inheritance tax threshold will be increased to £1m from 2017
Personal tax allowance to rise to £11,000 next year
The point at which people start paying income tax at 40p to rise from £42,385 to £43,000 next year

Business
Permanent non-dom status to be abolished - from April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens
£7.2bn to be raised from clampdown on tax avoidance and tax evasion with HMRC budget increased by £750m
Bank levy rate to be gradually reduced over the next six years and a new 8% surcharge on bank profits introduced from January 2016.

Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5% from November.

New apprenticeship levy for large employers

Corporation tax to be cut to 19% in 2017 and 18% in 2020

Climate Change Levy exemption for renewable electricity to be removed.

Health and education
NHS will receive a further £8bn by 2020 (in addition to the £2bn already announced)

Student maintenance grants to be replaced with loans from 2016-17, to be paid back once people earn more than £21,000 a year.

The maintenance loan will increase to £8,200.

Housing/infrastructure/transport/regions/culture/defence

Control over fire services, planning and children's services to be handed to consortium of 10 councils in Greater Manchester

Discussions on devolution of services to Sheffield, Liverpool and West Yorkshire

£30m for new body to promote integrated transport - including use of Oyster cards - in the north of England

Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate of income tax

Rent-a-room relief scheme to rise to £7,500

Government to spend 2% of GDP on defence every year and introduce a £1.5bn new Joint Security fund
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What has already been announced
The cost of funding free TV licences for the over-75s will be transferred from the government to the BBC between 2018 and 2021
The annual household benefit cap will be reduced to £23,000 in London and to £20,000 in the rest of Britain.
Subsidies for social housing will be phased out with local authority and housing association tenants in England who earn more than £30,000 - or £40,000 in London - having to pay up to the market rent

A consultation will take place on changing Sunday trading laws

Recipients of the Victoria Cross and George Cross will see annual pension annuities rise from £2,129 to £10,000, paid for by bank fines

Changes since March
This Budget increases Government expenditure by £83.3b over the course of the Parliament compared to what Osborne announced in March 2015. This will postpone the delivery of a surplus for 12 months.