2015 Budget updates:

The general state of the economy

The UK economy grew 2.6% in 2014, faster than any other advanced economy but lower than the 3% predicted by the Government back in December.

Savings initiatives

A Help to Buy Isa will be created in a further attempt to help first time buyers save a deposit to buy a home.

With this Isa, the government will add 25% to whatever is contributed by a saver. The monthly maximum contribution from savers will be just £200, with the government adding £50 a month at the most. The accounts will run indefinitely once opened, but if someone accumulates £12,000 over that time, a maximum of £3,000 will be added by the taxpayer.

The payment of the government bonus will be triggered if the saver buys a home worth less than £450,000 in London, or less than £250,000 anywhere else.

The government said “Savers will have access to their own money and will be able to withdraw funds from their account if they need them for another purpose, but the bonus will only be made available for home purchase.”

Paul Smee of the Council of Mortgage Lenders said: “Such steps are welcome. But as saving for a deposit will never become easy, we still need a clear focus on the supply of new housing that will help deliver a sustainable, affordable housing market over the long term.”

The cost of the tax subsidy to the Help to Buy Isa is estimated to rise from £230m in 2016-17 to £835m by 2019-20.

“Fully flexible” ISA will allow savers to withdraw money and put it back later in the year without losing any of their tax-free allowance.

The annual savings limit for ISAs is also increased to £15,240.

New personal savings allowance – the first £1,000 interest on savings income is to be tax-free for basic rate taxpayers with a £500 allowance for 40p tax ratepayers.

The chancellor hailed this as a major piece of tax simplification.

“People have already paid tax once on their money when they earn it. They shouldn’t have to pay tax a second time when they save it,” he said “with our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished.”

Call John M. Lewis & Co today for expert help and advice when buying our selling your house.

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