Budget 2015 Better or Worse Off

Budget 2015 Better or Worse Off

Has this year's Budget put more money in your pocket or left you counting the cost? We look at five different scenarios.

Chris Morgan

Tax Partner - Head of EU Tax Group

KPMG in the UK

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Better or Worse off

Married couple with two children

John and Sue are both in their late 30s and have two children. Sue is a middle manager earning £52,000 pa while John stays at home to look after the kids. They have a VW Golf and average 15,000 miles per year.

Assumption:

  • The car is a petrol vehicle
 Year Net Income after IT & NIC Indirect Tax Gain/(Loss) 
 2014/15  £38,718  £1,173  -
 2015/16  £38,917  £1,173  £199

 

The married couple have benefitted from the increase in the personal allowance and small increase in child benefit. However, this benefit has been eroded by the slight abatement of the basic rate band.

Graduate starting accounting job in London

Steven has just finished university and is starting work as a trainee accountant in London on £30,000 pa. He has taken out the full student loan available to him and is starting to make repayments.

Year  Net Income after IT & NIC  Indirect Tax  Gain/(Loss)
2014/15 £22,112 £0 -
2015/16 £22,244 £0 £132

 

Steven is better off due to the increase in personal allowance.

High earner

Hugh is a senior executive at a multi-national firm. He earns £200,000 pa and his wife is not in paid employment. They have no children. Hugh and his wife holiday in the Caribbean and America. He has a company car (Mercedes E-Class) and a second car (BMW 5 Series) which his wife uses.

Assumptions:

  • Hugh's wife drives a BMW 5 Series and averages 10,000 miles per year
  • The car is a petrol vehicle
Year Net Income after IT & NIC Indirect Tax Gain/(Loss)
2014/15 £116,641 £1,388 -
2015/16 £116,586 £1,388 £(55)

 

Hugh is worse off due to the reduction in the basic rate band in 2015/2016.

Single parent one child

Alex is a single parent in her late 20s. She earns £15,000 pa working 30 hours a week and relies on paid childcare for her one child. She has a 14-year-old Peugeot 106 and averages 12,000 miles per year.

Assumption:

  • The car is a petrol vehicle
Year Net Income after IT & NIC Indirect Tax Gain/(Loss)
2014/15 £14,221 £1,283 -
2015/16 £14,363 £1,283 £142

 

Alex is better off due to the increase in the personal allowance and a small increase in child benefit.

Retired couple

Frank (81) and Sally (76) are a married, retired couple. Frank has a state pension and an Occupational Pension of £10,000. Their investments consist of 100 shares in Santander with their main savings in cash ISAs. They have a Honda Jazz for quick trips to the shops and around the local area, averaging 2,000 miles per year.

Assumptions:

  • Frank has maximum state pension
  • Sally's state pension does not exceed her personal allowance
  • The car is a petrol vehicle
Year  Net Income after IT & NIC  Indirect Tax  Gain/(Loss) 
2014/15 £15,664 £332 -
2015/16 £15,801 £332 £137

 

Frank and Sally are better off due to the increase in the personal allowance.

Chancellor's Budget 2015

Chancellor's Budget 2015

Wednesday 18 March 2015

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