Budget 2015: How does the first Conservative Budget in nearly a Decade affect WAHMs?
On 8th July 2015 George Osborne was back, presenting his first Budget as Chancellor of the Exchequer of a majority Conservative government and the Budget he delivered was clearly indicative of the future his government want for the UK. Robert Peston of the BBC has described it as ‘less austere’ than expected whilst many others have criticised Osborne’s policies and plans for the next term. In his own words Osborne described his Budget as ‘a one nation Budget that takes the necessary steps and follows a sensible path for the benefit of the whole of Britain’. For us though, we’re looking at the key points which may affect self-employed mums and dads over the next few years.
Wages and Income
Though the national minimum wage is not necessarily relevant for all WAHMs it may be if you employ somebody or your partner works too. In an interesting turn of events Osborne has launched what he calls the ‘National Living Wage’ and promised that instead of the National Minimum Wage, a new National Living Wage will be introduced from April 2016, at £7.20 an hour and by 2020 he plans for this to be over £9 an hour. It is important to note that Osborne’s National Living Wage is not aligned with the work of the Living Wage Foundation figures and you can read their response to the Budget to see the differences.
A point which is more relevant to all work at home mums and dads it that Osborne has reiterated his increase of the tax-free Personal Allowance which will be increased to £11,000 in April 2016, meaning you can earn £11,000 before paying any income tax and they also plan to increase it further to £12,500 by 2020.
Tax and Employees
The main rate of Corporation Tax was cut in 2010 to 20% and it is to be cut again to 19% in 2017 and 18% in 2020, which Osborne claims will benefit over a million businesses and this is something to keep in mind if you run a limited company.
The annual investment allowance is also being increased a new high permanent level of £200,000 which means businesses will be able to deduct the full value of certain business items including their equipment and machinery up to a total of this figure.
Another key point for self-employed parent who have employees is the changes to the employer National Insurance bill and Employment Allowance. Their employer National Insurance bill will be cut by another £1,000 in April 2016 due to an increase of the Employment Allowance to £3000. This Allowance allows businesses to cut the employer National Insurance they pay and it means that from next year businesses will have the capacity to pay up to 4 people full time on the new ‘National Living Wage’ and pay no National Insurance. Alongside this Osborne has pledged the creation of 3 million more apprenticeship by 2020, giving you the chance to train someone up in your business.
Childcare and Education
One of the largest and most controversial changes in Osborne’s latest Budget is his cuts to tax credits. Osborne has announced support through Child Tax Credit will be limited to two children for children born from April 2017 and so many working and self-employed parents may be rethinking their family plans. More than this, all working age benefits include tax credits and Local Housing Allowance are to be frozen for 4 years from 2016-7. Thankfully this doesn’t include maternity and paternity benefits of sick pay but is a concern for many families.
At the more positive end of the spectrum for many, Osborne also confirmed that from September 2017 working families with 3 to 4 years will receive 30 free hours of childcare a week, as opposed to the 15 hours currently offered. This provision may help many self-employed mums and dads grow their businesses or plan their working days more effectively.
From an education perspective and very relevant to parents with older children, especially from low to middle income backgrounds, Osborne has also announced that maintenance grants have been scrapped for university students. Student maintenance grants supported students from lower income families by offering them a non-repayable grant throughout their studies, now, instead there is a loan in place and therefore anything paid will have to be given back once the student graduates and earns over £21,000 a year. Estimates suggest student debt will smash £50,000 for the lowest income households so we may see less people feeling able to access university.
The criticism of this Summer Budget has been pretty widespread and it is easy to see why but self-employed parents may be able to see some benefits, with the changes in childcare and continued rise of personal tax-free allowance possibly proving handy, even if the drop in benefit may put pay to any increase in living standards.