Summer budget - did you know?
Earlier this month, Chancellor of the Exchequer George Osborne delivered the second budget of the year. This so-called ‘summer’ or ‘emergency’ budget was called because the one that was announced in March had been devised under the coalition. This budget gave the all-Conservative treasury the first opportunity to set out its own policies.
So how will this additional budget affect Al Rayan Bank customers? We summarise the top five headlines below:
Employees over 25
From next April, all workers over 25 will benefit from a new compulsory National Living Wage, which will be £7.20 per hour, and reach £9 per hour by 2020. This is significantly higher than the current minimum wage, which is currently £6.50 per hour, and is due to rise to £6.70 from October. The hourly rate for younger workers will also rise, and for apprentices it will go up by 20% - or 57p - to £3.30 an hour.
|Did you know?
Al Rayan Bank already pays their employees a higher rate of pay than the National Living Wage. This is because the Bank voluntarily became a ‘Living Wage Employer’ and pays a ‘Living Wage’ fixed at £9.15 an hour in London and £7.85 an hour outside London. This rate is set independently and updated annually. Click here to find out more.
In the last budget it was announced that the single person's tax-free allowance - the amount that can be earned before paying tax, would rise to £10,800 in 2016-17. However, in his budget the Chancellor revised this to say that the first £11,000 of income would become tax free from April 2016. The point at which taxpayers pay the higher rate tax – 40% - on their income will increase to £43,000 from April.
Did you know?
For those tax payers that wish to save the extra money in their pay packet, Al Rayan Bank offers a comprehensive range of Sharia compliant savings accounts to suit every pocket. To find out more about these ethical, inclusive savings accounts, please click here.
Those saving for a pension
How we save for a pension could be set for major changes, after the Chancellor announced a green paper consultation on pension tax relief. As it is likely that the government wants to encourage more people to save for their retirement, many believe that it will have a favourable outcome, ie. lower tax on pension savings. However, it is an open consultation, and it is not possible to judge the outcome at this stage.
Did you know?
Al Rayan Bank, together with Carey Pensions, certifies The Islamic Pension Trust - a Sharia compliant pension scheme that meets the criteria for automatic enrolment. To find out more about this inclusive, ethical scheme, and how it differs from conventional auto-enrolment pension schemes, please click here.
From 2017, parents will be able to leave homes worth £850,000 to their children without paying inheritance tax. From 2020 this figure will rise to £1million, meaning each parent will be able to leave £500,000 in property without paying the tax (and if one parent dies, the other will be able to bequeath the entire £1million. This is an increase from the current £325,000 per person.
There is also good news for homeowners who rent out a room to tourists or lodgers. They will be given a tax boost from April 2016, as the Chancellor has increased the amount they can earn in rent tax-free to £7,500 a year.
Did you know?
Al Rayan Bank offers Sharia compliant Home Purchase Plan mortgage alternatives, where homeowners pay rent not interest. To find out more about these ethical, inclusive mortgage alternatives, please click here.