Cuts will hit the public sector hard, says union
For ordinary people in Northern Ireland, yesterday's Budget was much less painful that it could have been, it has been claimed.
It was, nevertheless, drawn up with a focus on austerity by a Chancellor who is determined to reduce the UK government's massive deficit.
The new plan – widely regarded as a Budget for savers – will be paid, in part, by the public sector, and by the implementation of a benefits cap.
In Northern Ireland, where public spending is the UK's highest and the average wage lower, the cost of the changes are likely to be proportionally higher than elsewhere in the UK.
The Unite union said the Budget would "leave Northern Ireland's workers empty-handed".
Regional Secretary Jimmy Kelly said the continued focus on public spending cuts would hit Northern Ireland particularly hard, while raising personal tax allowances would benefit higher earners.
Nevertheless, George Osborne's crowd pleasers yesterday included 1p off a pint of beer, a freeze on duty on spirits and cider, and a decision to bin the 3p fuel duty hike planned for September.
Among the other key measures outlined in the House of Commons were hikes in tax-free personal allowance, a boost to tax-free ISAs, new pensioner bonds, changes to pensions and the extension of the Help to Buy Scheme for potential homeowners until 2020.
Referring to the tax-free personal allowance – the amount of money that can be earned before 20p tax is paid – the Chancellor said it will rise to £10,500 in 2015.
Brendan O'Toole, personal senior tax manager at Deloitte in Belfast, said that increasing the basic threshold was good news for many.
"Thousands of Northern Ireland people will be exempt from income tax as a result of the increase in the personal allowance to £10,500, which will be worth £100 a year to the typical taxpayer," he said.
Mr Osborne also raised the threshold at which 40p tax is paid from £41,450 to £41,865 next month and by a further 1% to £42,285 in 2015.
Also welcomed was a move to merge cash and shares Isas into a single New Isa (NISA) with an annual tax-free savings limit of £15,000 from July 1.
Up to now savers could invest up to £11,520 each year in a stocks and shares ISA or £5,760 in a cash ISA.
"Savers will now be able to put up to £15,000 into NISAs, either as cash or shares, and will be able to transfer funds from previous ISAs, either cash or stocks and shares, into the NISAs," said Mr O'Toole.
A Tax-Free Childcare scheme for qualifying childcare costs for the under-12s, worth up to £2,000 per annum per child, will be rolled out from autumn 2015.
The scheme is available where both parents work, whether employed or self-employed, but neither earns more than £150,000. Working lone parents below the income threshold will also qualify.
Pensioners were among the big winners after it was announced that all tax restrictions on access to their pension pots will be removed, ending the requirement to buy an annuity.