Summer Budget July 2015 Summary

Chancellor George Osborne has delivered the first Budget by a wholly Conservative government in almost 20 years. The March 2015 Budget provided some clues as to possible new measures and of course, the Conservative election manifesto contained a wide range of commitments to be introduced during the course of the current parliament.

The Chancellor said that this is a Budget for working families in a ‘one-nation society’. In ‘a big Budget for a country with big ambitions’, he focused on how the government will continue with its deficit-reduction plans, whilst giving the promised support to ‘hard-working families’. He said that whilst the deficit would be cut at the same pace as under the previous government, it would be a bold budget containing bold new measures.

As predicted, savings in welfare spending of around £12bn, and increases in revenue from tax avoidance and evasion to yield around £5bn made an early couple of headlines in the Chancellor’s speech.

The welfare savings are to be funded by:

– ensuring those aged 18 to 21 who receive Universal Credit apply for an apprenticeship or traineeship, gain work-based skills, or go on a work placement 6 months after the start of their claim;
– subjecting benefit payments to a regional cap (£23,000 per year in London and £20,000 in other areas – cut from £26,000 a year);
– limiting child tax credits to two children for new claimants;
– working-age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016-17 and
– reducing rents for social housing by 1% a year for 4 years. Tenants on higher incomes (over £40,000 in London and over £30,000 outside London) will be required to pay market rate, or near market rate, rents.

With regards to tax avoidance and evasion, HMRC is to be given significant extra investment – some £60m between now and 2020 – for increased work on tackling evasion and non-compliance. It will be interesting to see how and where this money will be spent.

The Conservative manifesto pledged to introduce a new law within the first one hundred days of a Conservative government to prevent any rises in income tax, VAT or national insurance in the next parliament and it seems that this promise is now to be delivered. Broadly, a five-year ‘tax lock’ will guarantee no increases in income tax rates; no increases in VAT, nor an extension of its scope; and no increase in national insurance, nor an increase in its ceiling above the higher rate threshold. However, the Chancellor could still move the goalposts – there will still be plenty of scope to raise more revenue without increasing tax rates by widening the definitions of what is taxed, or by withdrawing tax reliefs.

For a further analysis of July’s Budget, please email us on to request our full budget newsletter. You can also subscribe to out YouTube Channel in order to view the forthcoming webinar with further analysis on the key points.

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