Budget 2015: George Osborne cuts taxes for savers and first-time buyers
The Chancellor announces a new savings allowance to give millions of people “tax free banking” and says first-time house buyers will have their deposits topped up by the Government with a “Help to Buy ISA”
More than 17 million people will no longer have to pay tax on their savings, George Osborne announced in his pre-election budget as he proclaimed that Britain is finally moving from “austerity to prosperity”.
The Chancellor announced plans for a “savings revolution” as the centrepiece for his final budget, just 50 days before the election.
Basic-rate taxpayers will not have to pay any tax on the first £1,000 of interest earned from savings – with higher-rate taxpayers benefiting from a new £500 tax-free allowance.
The perk is offered in addition to Isa allowances – which will now also become more flexible.
First-time buyers were also offered Government top-ups on their savings for a deposit to purchase a home.
The savings package comes on top of sweeping pensions reforms – due to be introduced within weeks – which will allow people to spend their retirement pots as they wish.
Mr Osborne also confirmed that the new freedoms will be extended to existing pensioners who will now be able to cash in their annuities without paying punitive rates of tax.
In an upbeat speech to Parliament, the Chancellor said that after nearly five years of Coalition government, British people were finally beginning to enjoy the benefits of the economic recovery.
He said that the “sun is starting to shine again” and that Britain is “walking tall”.
The average household will be £900 better off this year than in 2010, Mr Osborne said.
“This Budget helps hard-working people keep more of the money they have earned,” Mr Osborne said.
“This is a Budget that takes Britain one more big step on the road from austerity to prosperity. We have a plan that is working – and this is a Budget that works for you.”
In a surprise announcement, Mr Osborne was also able to proclaim that government debts – as a proportion of the total size of the economy – are forecast to begin falling this year.
The austerity programme will also end a year earlier than expected in 2018 – paving the way for the Conservatives to offer sweeping tax cuts if they are re-elected in the forthcoming general election. New tax pledges are expected to be included in the party’s election manifesto next month.
The official forecasts undermined claims by Labour that the Conservatives would shrink the state to a level last seen in the 1930s. Now, spending is only forecast to fall to the level overseen by Gordon Brown in 2000 as the austerity programme does not need to be as severe.
The economy is growing faster than expected and that borrowing will be £5billion lower than forecast over the next three years, Mr Osborne told the Commons.
Stocks in British companies soared in the hours after Mr Osborne’s speech.
The stock market responded positively to the announcement. The FTSE 100 Index enjoyed its strongest rise in two months, rising 107.6 points to 6945.2, adding £27 billion to the value of its constituent companies.
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