The Budget

What it means for you

The final Budget before the 2015 general election delivered some encouragement in particular for savers, pensioners and small businesses.

Pensions

Pensioners who have already bought annuities will be able to sell them for cash lump sums, which will be taxed at the marginal rate.

However, those with very large pension pots are set to lose out, as the maximum amount of pension savings that can benefit from tax relief will be £1m from April 2016, down from £1.25m.

Tax and National Insurance

The tax-free personal allowance is going up. In 2015-16 it will rise to £10,600, then to £10,800 in 2016-17, and again to £11,000 in 2017-18.

The higher-rate (40 per cent) threshold of income tax is rising above inflation from £42,385 in 2014-15 to £43,300 in 2017-18

The married couples’ transferable tax allowance is also rising slightly, to £1,100.

From the next Parliament, self-employed people will no longer have to make class two National Insurance contributions.

In another clampdown on tax avoidance, George Osborne announced a review of "deeds of variation" that have been a popular way for individuals to reduce the amount of inheritance tax they have to pay.

The automatic Gift Aid limit for charities has been raised to £8,000.

Finally, the Chancellor announced the abolition of paper tax returns, and a new system of year-round digital management of tax affairs.

Savings

The biggest news here was that savings will soon become effectively tax-free for the vast majority of savers. From April 2016, individuals will no longer have to pay tax on the first £1,000 of interest earned in a year, so only large savings accounts will attract tax. However, 40 per cent taxpayers will receive only £500 of interest tax-free. (Top-rate taxpayers, earning £150,000 a year, will not have any personal savings allowance).

Meanwhile the annual savings limit for ISAs has increased to £15,240 from 6 April 2015, and new flexible ISAs will allow savers to withdraw money and put it back in the same year without using up more of their tax-free allowance.

The Chancellor also introduced a new help-to-buy ISA that enables first-time buyers to save up for a deposit. The government will pay in £50 for every £200 saved.

Business

The good news for businesses was an extension for small business rate relief, and the announcement of a review of business rates. Corporation tax dropped to 20 per cent, while the minimum wage was raised to £6.70.