Other factors covered in the Summer Budget 2015

National Living Wage

From April 2016 a new National Living Wage of £7.20 per hour for the over 25’s will be introduced. One of George Osborne’s catchphrases during his budget speech was “The Government wants to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society.”

This is in effect a new minimum wage. John Allen, national chairman of the Federation of Small Business, thinks that some businesses may find it difficult to pay employees the National Living Wage, saying “Even though offset by a welcome increase in the employment allowance, some will find the new national living wage challenging”.

Government surplus by 2019/20

Prior to the Chancellors speech there was a lot of speculation about cutting the deficit. The surplus will be achieved by cuts to welfare and measures to tackle tax avoidance and evasion.

TAX AVOIDANCE
The Government are continuing to clamp down on tax avoidance and evasion and the Summer Budget announced further funding to the tune of £800m for HMRC.

David Evans, Tax Manager at Sedulo says,

With all the articles in the press over recent years about tax avoidance, it’s hardly surprising that the Government wants HMRC to continue the crackdown.

REFORM TO THE WELFARE SYSTEM
Some of the changes announced include:

  • Working age benefits including tax credits and local housing allowance to be frozen for 4 years from April 2016 (this doesn’t include maternity pay, paternity pay and sick pay).
  • Household benefit cap reduced to £20,000 (£23,000 in London).
  • Child Tax Credits limited to 2 children from April 2017.
  • 18 to 21 year olds on Universal Credit will have to apply for an apprenticeship or go on a work placement for 6 months after the start of their claim.
  • Rents for social housing will be reduced by 1% p.a. for 4 years with tenants earning over £40,000 having to pay market rate rent.

Apprenticeships

In a move to support the Chancellor’s pre-election promise, it was announced that 3 million new apprenticeships will be created during the current Parliament.

This will be funded by a levy on large employers.

Paul Cheetham-Karcz, Managing Director at Sedulo says,

This is great news for the youth of the country. We have always used the academy system and Sedulo has been built on training young ambitious candidates. Some of our management team here began as apprentices so this is great news all round.

Free childcare

As of September 2017, 30 hours of free childcare per week will be available to working families with 3 and 4 year olds. The Government say this will be worth around £5,000 per child to families.

Student maintenance loans

Up to now, students going to University from low income families have been able to apply for a Government grant to contribute to costs.

The Chancellor has announced that this grant system will be scrapped in England & Wales from the 2016/17 academic year.

Instead, students can apply for a loan which will be repayable once they earn over £21,000 p.a.

The press have pointed out that this measure will result in the poorest students leaving university with the biggest debts.

Road tax

The road tax system will be revised; from 2017 there will be a flat rate of £140 for most cars (except for the first year when the tax will be linked to CO2 emissions).

Electric cars won’t pay any road tax and the most expensive cars will pay more. This won’t apply to existing cars.

In addition, the Government will extend the deadline for first MOT’s for new cars from 3 years to 4 years.

More on how the Summer Budget 2015 affects you…

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