Wed, 08 Jul 2015
CHANCELLOR George Osborne has announced a new National Living Wage in a budget that has been welcomed by the region's politicians and traders.
In the first Tory budget in almost two decades the Chancellor also set out plans to cut tax credits for families with more than two children, increase the inheritance tax threshold to £1m for married couples and to increase the personal tax allowance to £11,000.
Mr Osborne also announced a new benefit cap of £23,000 for households outside of London.
The new National Living Wage will be set at £7.20 for workers aged over 25 from April next year rising to £9 in 2020 and will effectively replace the current minimum wage of £6.50.
Newbury MP Richard Benyon said the move was "great news" for many of his constituents.
"It was great to be at the first all Conservative budget for 18 years and to see some really sensible changes made that will continue the recovery and protect those on lower incomes," he said.
"I think the really dramatic announcement, in fact I've never seen anything like it, was on the living wage which I'm a great supporter of because in an area like the Thames Valley - an expensive place to live - the minimum wage did not provide many people with enough to live on.
"Increasing the living wage and also the increase on the threshold on income tax will be great news for a lot of my constituents."
Reading West MP Alok Sharma also welcomed the Summer Budget claiming it could be seen as the end for Britain’s high tax, high welfare and low wage economy.
He added: "I particularly welcome the increase in the personal allowance and the introduction of the mandatory National Living Wage which will put more money into the pockets of my hard working and aspirational constituents.”
“Businesses will also welcome the further cuts in Corporation Tax and National Insurance, which will help continue to boost business confidence and further reduce unemployment, which is already at record lows in my Reading West constituency.
"The Government’s long term economic plan is working for Reading West.”
Newbury accountants James Cowper Kreston also welcomed the Chancellors announcement on the increase in the inheritance tax threshold however they warned the budget could come with a sting in its tail.
Ian Miles, a partner specialising in personal tax at James Cowper Kreston said that the inheritance tax threshold would be welcomed by home-owners across the Thames Valley but feels that buy-to-let investors would not be thrilled to learn that mortgage reliefs will be limited to 20 per cent by 2020.
He said: “Many people have chosen to purchase second homes as part of their pension plans. Whilst this will leave them out of pocket, it is unlikely to dampen the enthusiasm for buy-to-let.”
Businesses across the Thames Valley are also set to benefit from the cut in the corporate tax rate to 19 per cent in 2017 and 18 per cent in 2020.
However, small businesses owners who choose to pay themselves via dividends may face a higher tax bill than expected.
Sharon Bedford, a corporate tax specialist at James Cowper Kreston said: “This announcement is a surprise and will be disappointing for business owners.
"Many choose to pay themselves via dividends as it has been, until today, a more tax efficient way to take an income. They will need to make some swift calculations on the most tax efficient way to now pay themselves.”