Summer Budget 2015

By Darren Laverty, Sales and Marketing Director at Foster Denovo

The Budget almost feels like a small ‘thank you’ to those who voted for the Conservatives in the General Election.

A not insignificant pay rise for lower paid workers who could be £89 per month better off*.

The average house price in London is £534,000. The increase in inheritance tax could be a good way of attracting more voters in the capital. However, this could create a longer term problem as those who may have downsized later in life may choose to keep their estate where it won’t be impacted by inheritance tax. Holding on to those properties for tax avoidance reasons could impact on supply and demand and therefore putting property values even higher at a time when more affordable housing is required.

I am also encouraged to read about the support for pensions savers. People need to understand and respect the need to save for the long-term. Introducing measures such as financial education in the workplace will help to support this. It is also good to hear that the Pension Wise service will benefit from increased marketing.

*
Current basis where nil rate band is £10,600
40 hr week
£6.50/hr for current National Minimum Wage for over 21’s
£13,520/a
After Tax & NI = £1,023.40/m = £12,280.80/a

New basis where nil rate band is £11,000
40 hr week
£6.70/hr for new National Minimum Wage for over 21’s
£13,936/a
After Tax & NI = £1,053.64/m = £12,643.68/a

National Living wage for over 25’s to be £7.20 from next April – where Nil Rate band is £11,000

NP: We have assumed no changes to the Primary Threshold (above which employee National Insurance of 12% starts to be paid).  This is set to increase by changes in CPI (Consumer Price Index) based on changes in the 12 months up to September of the previous calendar year.  As we do not have these figures we have not made any assumption on any increases, but would expect any such increases to be very slight.

The National Living Wage of £7.20 for over 25’s from 2016/2017 tax year is due to be discussed in more detail today, so we may see changes to this.

40 hr week
£7.20/hr for new National Minimum Wage
£14,976/a
After Tax & NI = £1,112.57/m = £13,350.88/a