The Budget 2015 – four reactions

What does George Osborne’s latest Budget mean for the type of people who seek financial advice on unbiased.co.uk? We consider consumer reactions from four points of view.

people on sidewalk

Esme

Esme is 28 years old and five years into her career in recruitment in London.

She is fast climbing the career and salary ladder, single and thinking about buying her first property.

“I really like the sound of the help-to-buy ISA, as getting £50 for every £200 you save has got to be a good thing. My only worry is that it’ll push up house prices even more, if everyone’s doing it. The new tax-free savings allowance also leapt out at me, where you get the first £1000 of interest tax free. I don’t expect my savings to earn that much interest, so it doesn’t look like I’ll be paying any tax on them at all! I do like the sound of the flexible ISA, as sometimes you take money out only to realise you can put it back in again, and using up your allowance in that way always seemed a bit unfair. That allowance has gone up too of course, although I can’t see myself using the full £15,240 this year.”

Bob

Bob is 62 years old and married with two grown-up children. He is approaching retirement after twenty years as a head teacher at a comprehensive school.

“The big thing for me was the annuities news. I’m not fully retired yet, but I have begun to draw from a small annuity that isn’t really worthwhile, to be honest. I’m not sure that buying it was the right decision so I’m planning to talk to someone about possibly trading it in. Of course, I know I probably won’t get back its full worth, so I’ll have to see how much I’m offered for it and make that judgement.

“I was a bit concerned about the announcement on inheritance tax. I’d heard about using deeds of variation to reduce the amount of tax your children have to pay on your estate, and I’d wondered about arranging something like that. If they are trying to phase that out then I might have to see if there are any other ways to reduce inheritance tax that are still acceptable.

“The increase in the personal tax allowance should benefit my children I hope, and should also let me take out more from my pension if I choose a drawdown option.’

Craig

Craig, 52, is director of a small retail company. He has four children from two marriages, with the eldest currently in higher education.

“The new flexible ISA – it’s about time! I always seem to use up my annual limit too fast, and I have done that thing of taking money out only to put it back in and waste the allowance, so that’s great. I also took note of the help-to-buy ISA – not for myself obviously, but my oldest son will be looking for a property soon I expect, and this could be a great way to help him out, if every £200 I give him gets an extra £50.

“With my business hat on, I’m glad to see a review is planned on business rates for both large and small businesses, and an extension for small business rate relief. The drop in corporation tax to 20% is also good and should boost the UK’s competitiveness. I noted the minimum wage rise to £6.70 – some businesses might struggle with this, but personally I’m very much in favour.

“Last but not least, I won’t be sorry to see the back of personal tax returns. It’ll be interesting to see how they manage it all online (let’s hope nothing goes wrong!).”

Sally

Sally is 41 and lives with her husband in Greater London. They have two children (11 and 9) who are privately educated, and employ a full-time live-in nanny as they both work full time.

“I think a lot of the pension reforms have been great, and are a great incentive to people to save for their retirement. I suppose there had to be a downside, and it turns out to be reducing the lifetime allowance from £1.25 million to £1 million. I would be on course to exceed that if I kept on saving at my current rate until my planned retirement rate, so I’m not sure what I’ll do yet. It would be good to find out what the best alternatives are, if that tax relief is no longer going to be available above that limit. I also noted that, as a higher rate taxpayer, I’m only eligible for a £500 tax-free allowance on savings interest instead of £1000 – fair enough!

“On the plus side, we do get the marriage tax allowance threshold rising to £1,100. More importantly, the increase in the Gift Aid limit for charities from £5000 to £8000 is great news, and should get a lot more people donating bigger sums to good causes.”

The best way to find out how the changes in the Budget may affect you and your family is to speak to a financial adviser.

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