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2015 Budget Changes Explained In Brief

George Osborne delivered his first Conservative budget on Wednesday but how will what he announced affect you?

Tax Credits & Benefits

This is the area with some of the biggest changes. From April 2017 Tax credit and Universal credit will be restricted to two children. This will, however, only affect those with children born after April 2017.

Additionally, the income threshold for tax credits will reduce from £6,420 to £3850.

For people living in London the benefits cap will be reduced to £23,000 while those living outside London will see it go down to £20,000

Maternity pay and disability benefits will not change.

Housing

There will be a 1% reduction in social housing rents for the next four years. However, if a housing association tenant in England earns more than £30,000 (£40,000 in London) they will be expected to pay up to the market rent.

18 to 21 year olds are not automatically guaranteed housing benefit instead there will be a new “earn to learn” obligation.

Insurance premium tax is rising which will result in an average home insurance bill rising by £9.48 per year.

Income Tax & Salary

If you work in the public sector your pay rises will be capped at 1% for a further four years.

From October the minimum wage will rise by 20p to £6.70 per hour for those over 25. Younger workers will also see a pay increase.

From April 2016 the minimum wage will be replaced by a compulsory Living Wage for those aged over 25. This will start at £7.20 an hour and rise to £9 by 2020.

From April 2016 Personal Tax Allowance will rise to £11,000 and most people will not pay income tax on the first £12,500 of their annual income by the end of the current Parliament.

For higher rate taxpayers the point at which you start paying 40% will rise to £43,000.

Students

The current maintenance grant which is awarded to students from low-income families is to be scrapped and replaced with a loan for those starting university in 2016-17.

The maximum loan available will increase to £8,200 and loans will only be paid back once they earn more than £21,000.

Motoring

Fuel duty remains frozen at current levels.

Due to the changes in insurance premium tax the average cost of insuring your car will rise by £12.25 a year.

From 2017 most new cars buyers will pay a standard charge of £140 for Vehicle Excise Duty. There will be no change to duty on current vehicles.

You can use the BBC budget calculator to find out how these changes will affect you.

If you find yourself in short-term financial difficulty we have many loan options available to see you through until you can get back on your feet.

Clare McDonald
Clare McDonald
As a mother of two, Clare knows the importance of being careful with money, so writes posts from personal experience.Clare also loves to find great deals, so shares her finding here.

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