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Summer Budget 2015: Key points

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Picture: Taken from HM Treasury's Gov.UK website

The Chancellor, George Osborne, announced the Summer Budget today.

Among the key points were:

Benefits and welfare reform

  • Welfare Reform and Work Bill will be published Thursday 9 July which will lay out the Chancellor's proposals in greater detail

  • Working age benefits will be frozen for the next four years with the exception of maternity pay, Personal Independence Payment, disability pay and Employment and Support Allowance

  • Abolishing automatic entitlement for Housing Benefit for 18-21 year olds

  • Employment and Support Allowance will be cut to the level of Jobseeker's Allowance for those deemed fit to work - for future claimants only

  • Increasing childcare for up to 30 hours per week. From September 2017, all working parents will receive up to 30 hours a week free childcare

  • Rents paid in social housing will be reduced one per cent a year for next four years

  • Reduce benefits cap to £20,000 (£23,000 in London)

  • There will be no extra tax credit, Universal Credit, or housing benefit support for a third child after 2017. There will be provisions for exceptional circumstances like "multiple births"

  • Technical cuts to tax credits:  Universal Credit work allowances will be similarly reduced – and will no longer be awarded to non-disabled claimants without children.

Tax credits

  • The rate at which a household’s tax credit award is reduced as they earn more will be increased, by raising the taper rate to 48 per cent. The income rise disregard will be reduced from £5,000 to £2,500 – the same level at which it was originally set in 2003

  • The income threshold in tax credits will be reduced, from £6,420 to £3,850.

Tax

  • Personal allowance will rise to £11,000 next year, from £10,600 at the moment

  • Once the £12,500 goal is met, the threshold will be tied to the minimum wage

  • The 40p threshold will be £43,000 from next year, up from £42,385 - set to reach £50,000 by 2020.

Employment and pay

  • Introducing a new National Living Wage set to be £9 per hour by 2020, to begin next April and will be compulsory. Low Pay Commission will recommend future rises. The National Living Wage will be at least 60 per cent of median earnings by 2020

  • For Small and Medium Sized Enterprises (SMEs) – the employment allowance is rising to £3,000 which will allow small firms to employ four people on the national living wage without paying any national insurance

  • Youth obligation for 18-21 year olds to "earn or learn"

  • Effect on corporate profits is offset by announcement that corporation tax is going down to £18,000 by 2020.

More information to follow...

Date of publication: 8 July 2015