George Osborne, today delivered his first Budget from the new Conservative majority Government.
8th July 2015Personal Allowance to be increased to £11,000 in April 2016
Chancellor, George Osborne has moved quicker than expected to increase the tax-free Personal Allowance from £10,600 in 2015-16 to £11,000 in April 2016.
Previous forecasts were that the allowance would be raised from the current £10,600 to just £10,800 but an additional £200 of tax free income has now been formally granted.
During his Summer Budget 2015, Mr Osborne reaffirmed his commitment to raising the tax-free Personal Allowance to £12,500 by the end of the Parliament, whilst also pledging to increase the allowance in line with inflation during the next five years.
The Chancellor labelled the move as “a down payment for a country on the up”.
“Our priority is not to raise taxes for working people but to cut them,” said Osborne.
“These were our priorities at the election and they are the priorities of this Budget. Rates of income tax in this Budget remain unchanged but the thresholds do not.”
Increases to the main rates of income tax have been ruled out by the Chancellor, but the higher rate tax threshold will rise from £42,385 in 2015-16 to £43,000 in 2016-17 and to £43,600 in 2017-18.
The move in itself could save £1,300 a year for workers earning between £50,000 and £100,000, according to reports.
8th July 2015Mortgage interest tax relief limited for buy-to-let landlords
Buy-to-let landlords will only be able to offset mortgage interest at the basic rate of tax by 2020, Chancellor, George Osborne has announced at today’s Summer Budget 2015.
At present, landlords pay income tax on the rent they recoup by declaring the amount they earn on a Self-Assessment tax return.
The tax is charged in line with their normal income tax banding – which stands at 20 per cent for basic-rate taxpayers, 40 per cent for higher rate taxpayers and 45 per cent for additional-rate payers.
The wealthiest landlords receive tax relief at 40 per cent and 45 per cent but the Chancellor’s rule change means tax relief will be capped at 20 per cent for all landlords.
Mr Osborne says the move has been made to create a “level playing field” between prospective landlords and those buying their homes to live in.
“Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot,” said Osborne.
“And the better off the landlords, the more tax relief they get.”
The Chancellor said this had contributed to the rapid growth in buy-to-let properties across the country, which reportedly accounted for 15 per cent of all mortgages taken out this year.
“So we will act – but we will act in a proportionate and gradual way, because I know that many hardworking people who’ve saved and invested in property depend on the rental income they get,” added Osborne.
Osborne also confirmed that from April 2016, the existing ‘wear and tear’ allowance will also be replaced. The allowance lets landlords reduce the tax they pay whether or not they replace furnishings in their property.
A new system will be implemented in its place to only allow tax relief for landlords when they actually replace furnishings.