Summer Budget Date Announced

The Chancellor of the Exchequer George Osborne has announced that there will be a Summer Budget on Wednesday 8 July 2015, when more will be known about the new Governments future tax plans.

In the run up to the election the Conservative Party promised a five year tax lock, meaning that between May 2015 and May 2020 there will be:

• No increases in income tax rates
• No increases in VAT – nor an extension to its scope
• No increases in National Insurance – nor an increase in its ceiling

Further comments from the Conservative Party manifesto build quite a picture of forthcoming tax changes:

• Nobody working 30 hours on minimum wage will ever pay income tax
• The tax free personal allowance will rise to £12,500 by 2020
• The 40p tax threshold will increase to £50,000 by 2020 – and will always rise at least in line with inflation
• The family home will be taken out of inheritance tax by lifting the threshold to £1m – achieved through a new transferable main residence allowance of £175,000 per person

The manifesto says the new IHT transferable main residence allowance will be paid for by reducing tax relief on pension contributions for people earning more than £150,000. Proposals to reduce the annual allowance of £40,000 by £1 for every additional £2 of income to £10,000, would give an effective marginal income tax rate of 67.5% between £150,000 and £210,000 for those making contributions.

It is expected that The Summer Budget will confirm the proposals within the manifesto and possibly outline further changes to raise tax revenue in order to pay for the ‘five year tax lock’.