The income tax personal allowance will increase to £10,600 in April resulting in basic rate taxpayers saving £100 in 2015-16. The Chancellor has also pledged that if the Tories win the election the allowance would increase to £12,500; this will mean that employees on minimum wage would not pay income tax.
The increase in tax allowance was also extended to higher-rate tax payers meaning that the 40 per cent income tax rate will become payable from £42,385 in April, an increase from £41,865. This will give higher-rate tax payers a saving of £184. The Chancellor also gave an indication that this could increase to £50,000 by 2020.
Businesses who hire apprentices under the age of 25 will be exempt from national insurance contributions. The aim of this exemption is to improve access to work and training, with a target to create 3 million apprenticeships in the next Parliament.
Carers allowance earnings limit will increase in April 2015 from £102 to £110 per week. Also, households that employ a carer will benefit – care workers will be able to earn up to £22,500 without having to pay national insurance.
The Statement laid out initiatives to help the government reach their target of allowing £10bn of finance for SMEs (small and medium-sized businesses) by 2017/18. It was announced that, under the newly set up British Business Bank, £400m will be available to increase the Enterprise Capital Funds, a scheme where the government backs venture capital funds, and up to £500m of new bank lending will be guaranteed. The Funding for Lending (FLS) scheme, to increase bank lending to firms, will also be extended for another year, focusing more on smaller firms. Under this scheme, the government guarantees 75% of an SMEs bank loan.
Other interesting developments •Income tax will be devolved fully to a Scottish Parliament •Migrants will lose unemployment benefits if they have “no prospect” of work after six weeks •Working-age benefits will be frozen for a further two yearsIf you would like further clarification on this issue please contact the Peninsula Advice Service on 0844 892 2772.