Budget 2015: what it means for you

There were plenty of people dreading this particular Budget. We'd had all the good news in the election campaign - so we knew we could get no increases in income tax or VAT - and that key thresholds would be raised.

However, we heard very little about where George Osborne was going to wield the knife and bring us the £12 billion worth of cuts we were expecting. We anticipated something of a pensions and welfare bloodbath.

We weren't wrong. Osborne tried to position his heavy cuts as the least terrible option. He said: "The greatest mistake this country could make would be to think all our problems are solved. You only have to look at the crisis unfolding in Greece as I speak to realise that if a country's not in control of its borrowing, the borrowing takes control of the country."

However, with the sheer level of pain he then went on to outline, there will be plenty of people who will be wondering whether things really could be any worse - no matter how indebted the country becomes.

Overall he announced £37 billion needed to be saved by 2020. Some £12 billion through welfare cuts and £5 billion by tackling tax evasion and avoidance, and the rest through 'efficiency' for various government departments.

Benefits
The news for those on tax credits and some benefits was dire. Overall working age benefits will be frozen for the next four years - which is essentially a major cut in benefits when you take inflation into account. A handful of benefits are excluded from this - including statutory maternity pay and some disability benefits.

The benefits cap will also arbitrarily be reduced from £26,000 to £23,000 in London and £20,000 for the rest of the UK.

The tax credit system will be slashed, so that for those with children born (or making a first claim) after April 2017, tax credits and universal credit will be restricted to two children. There will be no first child premium, and there will be no family element in the tax credit for those starting a family after 2017.

The income threshold for tax credits will also be cut dramatically from £6,250 to £3,850.

Young people aged 18-21 will be expected to 'learn or earn', and there will be no benefits for those who refuse to do either. Housing benefit will also be removed for this group except for in exceptional circumstances for vulnerable people - so they will need to continue to live at home.

Disabled people who have been assessed as being too ill to work, but able to work towards employment in future, face cuts. Instead of the more generous employment support allowance, they will be on the equivalent of jobseekers' allowance - which Osborne said would remove the inventive to stay on the benefit for the long term. This change will not affect current claimants.

For those in social housing, rents will reduce by 1% a year for the next four years. Those households earning more than £40,000 in London or £30,000 in the rest of the UK will be expected to pay market rent.

And just in case anyone was hoping for light at the end of the tunnel, Osborne announced a new fiscal charter, which would commit to debt falling as a share of GDP every year until it gets to surplus in 2019/20. It will also commit to generating a surplus in 'normal times' - thereby enshrining lower welfare payments in legislation.
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Public sector
There's more bad news for the police service and teachers, as public sector pay rises will be limited to 1% a year for the next four years. The NHS will get more funding to the tune of £8 billion a year by 2020 - in return for commitments to efficiency savings.

Students
Maintenance grants for students with family incomes below £42,000 will be scrapped and replaced with loans - which will be increased to £8,200. The government will consult on freezing the repayment threshold at £21,000 for the next five years. Osborne argued that this was fairer on lower income families paying for these grants through their taxes - when in all likelihood the students they supported would go on to earn more than they do.

Living Wage
Osborne, ever the fan of pulling rabbits out of hats - introduced a national minimum wage just as the House of Commons was expecting him to sit down. He said this would be £7.20 next year and would rise to £9 an hour by 2020 - for everyone aged 25 and over. He called this a 'pay rise' for Britain.

Tax
During the election the government promised to increase the threshold at which people start paying income tax from £10,600 to £12,500 during the life of the parliament. Today he announced an increase to £11,000 next year as a step along the way.

Another manifesto promise was raising the threshold for high rate tax to £50,000 by the end of the parliament. He announced it would increase to £43,000 next year.

Childcare
As laid out in the manifesto, there will be a doubling of childcare for those with children aged 3 and 4, to 30 hours a week. In return mothers whose youngest child is three or older will be expected to work.

Tax avoidance
The government will invest another £750 million in combating tax avoidance and evasion. The headline announcement was a clampdown on non-dom status. Osborne said he wouldn't axe it altogether, as it was designed to bring people to the UK temporarily to add value to the economy, and abolishing it would simply send them away.

Instead he introduced restrictions, so the status cannot be held by anyone born in the UK to British-born parents, stopping the practice of putting property into a corporate structure to avoid tax, and abolish permanent non dom tax status, so that those who have been in the UK for 15 of the past 20 years will pay UK taxes on their worldwide income. He expects the changes to raise £1.5 billion over the course of the next parliament.

He also closed a number of loopholes that are being exploited by those they were never intended for including the use of the employment allowance by sole traders, and disguised employment.

Businesses
Surprising many, Osborne announced that corporation tax will be cut still further from 20% to 19% in 2017 and 18% in 2020. However, to enable this to happen he has closed an enormously popular tax planning loophole relied on by firms of all sizes.

At the moment many business owners take small salaries, and then pay themselves in dividends because the tax is much lower. To stop them doing this, Osborne announced that the dividend tax credit would be replaced by a new tax free allowance of £5,000. Any dividends taken amounting to more than this are taxed - at increasing rates depending on how much is taken in dividends - at 7.5%, 32.5% and 38.1%. He said that those who pay themselves in dividends will pay more tax.

To push more apprenticeship schemes, he also introduced an apprenticeship levy on large businesses. He added that those large businesses that employ apprentices of their own can get back more than they pay in - but it will cost many large firms more.

For smaller businesses he introduced a permanently higher rate of business investment allowance - to replace the temporary boosts he has announced so far. He also announced national insurance employment allowance would rise by 50% to £3,000 from 2016.

Banks
He announced that the bank levy would be gradually reduced over the next six years. Meanwhile, an 8% surcharge on bank profits will be introduced in January 2016 - which he said would raise more money overall.

As expected, he announced more philanthropy for those in uniform and representing the best of British values - to be paid out of banking fines. These included more cadets in schools, that the recipients of the Victoria and George Cross medals for bravery will get a £10,000-a-year thank you payment, more help for injured special forces and a permanent memorial for those murdered in the Tunisia attack.

Insurance
There was some good news, in that the government is reviewing claims management companies - which will amount to a clampdown on nuisance calls from these firms.

There was also bad news however, with a rise in insurance premium tax to 9.5% - which is paid on a fifth of all premiums.

Drivers
Road tax will be reformed, because technology has reduced emissions so far that the emission-based system is catching fewer and fewer people.

There will be a new system so that the first year of road tax will be based on emissions, then cars will be split into those with zero emissions, those with standard emissions, and premium cars - 95% of people will pay the standard rate at £140 a year - down from the current £166 charge.

The money raised by road taxes will be put into a dedicated fund to pay for roads.

Meanwhile, fuel duty remains frozen this year.

Property
There was a major change to tax allowances for investors in buy-to-let property, which Osborne positioned as levelling the playing field so that property was no more affordable for investors than it was for people looking for a home.

At the moment investors can offset the interest payments on their mortgage against tax on their rental income. Over the next four years it will phase in a change so that only basic rate tax relief is available on mortgage interest payments. Apparently the four year process is meant to allow people who have invested in property to find the extra money in their calculations - and presumably sell their properties.

The rent-a-room scheme offering tax relief for people who make money by renting out a room, meanwhile, will be made more generous, so people can make £7,500 a year from it before they have to pay tax.

Inheritance tax
The inheritance tax threshold will be lifted to £1 million for couples from 2017. This will be done by introducing a new £175,000 allowance for people who leave their home to their children or grandchildren - on top of the current £325,000 allowance. This can be passed between spouses, so that between them they'll be able to leave a property worth up to £1 million without paying inheritance tax.

Pensions
The government had already announced changes to pensions tax relief for higher rate taxpayers. However, Osborne announced a change that would go much further. He is publishing a green paper including wide-ranging discussions on what should happen to pensions in the UK.

He dropped a huge hint that one option on the table is completely changing pensions so that instead of getting tax relief on contributions, people will pay tax before they invest, but receive income from their pension tax-free. It potentially paves the way for even more far-reaching transformation of the pensions landscape.

Osborne also announced that support for the victims of the Equitable Life scandal would be doubled for those affected by the scheme who are currently on pension credits.

Devolution
Osborne pushed for more devolution on a local level in England - as well as between nations. He argued that Manchester was getting more powers for its local mayor and said that the government was in discussions with other cities for similar arrangements.

There will be devolution of shop opening powers to local authorities, which is expected to lengthen Sunday opening hours.

Defence
Osborne committed to meeting the Nato recommendation of spending 2% of the nation's budget on its armed forces, and raising the defence budget in real terms every year.

BBC
Free TV licences for the over-75s will be paid for by the BBC rather than the government, and in return would be assured of funding for the future.

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