In his opening speech the chancellor told MPs “Britain is walking tall again” after five years of coalition government. He described Britain as “growing, creating jobs and paying its way”.
Osborne claimed the latest projections show living standards will be higher than when the coalition came into office. “The sun is starting to shine – and we are fixing the roof,” he said.
The announcements
Savings
• Under new rules, savers won’t have to pay any tax on interest on the first £1,000 of savings income, or £500 for higher-rate taxpayers from next year.
• Isas will be made more flexible, allowing savers to keep tax benefits when they take money out and put it back in. Currently once you take money out of an Isa it loses its tax-free status.
• A new savings product will be introduced for first-time buyers. People saving to buy their first property can open a Help To Buy ISA. For every £200 they save in it, the government will add £50 up to a maximum £3,000 government contribution.
Pensions
• Pensions lifetime allowance cut from £1.25m to £1m. Osborne said this will affect less than 4% of people.
Income Tax
• From next year the personal tax free allowance will rise to £10,800 and then £11,000 the year after. Osborne described this as “A tax cut for 27m people”.
• From 2017-18 the higher rate tax 40p threshold will rise to £43,300.
• Osborne says he wants to eventually raise the tax-free allowance to £12,500 and 40p rate to £50,000.
• Class 2 national insurance contributions for the self-employed to be abolished in the next parliament.
• Annual tax returns also to be abolished. This will be “a revolutionary simplification of tax collection,” said Osborne.
Beer and fuel duty
• Beer duty down 1p and cider and scotch whisky duty are down 2%, with wine duty frozen
• The fuel duty increase scheduled for September is to be cancelled. Osborne says his fuel duty cuts have saved the average family £10 when they fill up a car.
Energy/North Sea
• £1.3bn of support for the oil and gas industry through a series of tax cuts to petroleum revenue levies, supplementary charges and a tax allowance.
Bank sell-off
• Sale of £13bn of mortgage assets from Northern Rock and Bradford & Bingley.
• Lloyds Bank assets worth £9bn also being sold.
• Money to be used to pay down the national debt.
Regional initiatives
• A comprehensive transport strategy for the North to help create a “Northern Powerhouse”.
• Business rate receipts devolved to Manchester, and offer to do the same to Cambridge.
• Eight enterprise zones across Britain, with new ones in Plymouth and Blackpool.
• Tolls on Severn bridge to Wales cut by 2018.
To read the industry’s reaction to the Budget click HERE.
