From a freeze in fuel duty to cuts in tax on savings, we round up the highlights of Chancellor George Osborne’s final pre-election Budget.
Potential £3,000 windfall for first-time buyers
The government has given potential first-time homebuyers a significant boost with the announcement of a new Help To Buy ISA in today’s Budget.
Under the new ISA (individual savings account), each £200 saved towards a deposit on a first home will be automatically topped up with £50 from the state.
The maximum that can be received under the scheme will be £3,000, and savers will need to put down £12,000 of their own to be eligible for the full amount.
The scheme is due to be launched through banks and building societies in the autumn.
Earn up to £1,000 a year interest on savings before tax
Chancellor George Osborne announced further measures to help savers in today’s speech, which was the final Budget of the current Parliament.
The automatic deduction of 20% income tax on bank and building society savings accounts will end next April, and everyone will be allowed to earn interest of up to £1,000 a year before tax is due.
More ISA reforms
Osborne also said that, from this autumn, savers would have greater flexibility over making withdrawals from their ISAs.
At present, any money withdrawn from an ISA loses its tax-free status.
But under these changes, individuals will be able to withdraw and re-deposit or re-invest money without it affecting the amount of tax they are liable to pay or their annual allowance.
Earn more before you’re taxed
There were also increases in the annual personal allowance announced: from next month, everyone will be able to earn £10,600 a year before income tax kicks in.
But from April 2016, this will be raised to £10,800 and then £11,000 in the following year.
Osborne also said he planned to increase the threshold for higher-rate tax in 2017-18, which means fewer people will pay the 40% and 45% rates.
The annual paper tax return is being abolished and replaced with a new automatic digital system.
Duty frozen on fuel and cut on alcohol
The government has frozen the fuel duty increase which was originally scheduled to come into effect in September: this means duty will have been kept at the same level for five years by the end of the 2015-16 financial year.
Duty on beer is to be cut by 1p a pint for the third year running, while duty on sprits and cider will also fall.
Wine duty will remain at its current level.
People who have already bought annuities will be able to cash them in under new government proposals.
At present, annuities – which millions of people have bought with their pension funds to guarantee an income for the rest of their lives – cannot be re-sold without incurring heavy tax penalties, but these are being abolished.
But there will be a lower limit on how much money can be saved into a pension over the course of someone’s working life: the current lifetime allowance is being cut from £1.25 million to £1 million.
This is only likely to affect people whose pensions would produce an income of around £50,000 a year.
Cuts to Severn tolls
Osborne also announced that from 2018, when the Severn Bridge returns to public ownership, tolls for both cars and vans would be cut to £5.40 from the current rates of £6.50 and £13.10 respectively.