17 March 2016
Budget Summary
In yesterday’s budget, his eighth, George Osborne announced a reduction in the growth forecast for 2016 to 2%, from the 2.4% given in the autumn statement. The lower figures for GDP means that debt as a share of GDP is revised upwards although cash debt levels for the current year have undershot by £9 billion. The Chancellor is still projecting a surplus in 2019/20 on the basis of a further £3.5 billion of cuts before then.
Among specific measures announced:
• from April 2017 the personal allowance will rise to £11,500 and the threshold for higher rate tax will rise to £45,000. Capital gains tax will be cut from 28% to 20%, the rate dropping to 10% for basic rate taxpayers. Insurance tax will rise by 0.5% and class 2 National Insurance Contributions will be abolished;
• corporation tax is to be reduced to 17% by 2020, a change which will be paid for by a reduction in tax relief for interest and losses. There is also to be a further onslaught on tax avoidance, including new rules on personal service companies;
• the threshold for small business rate relief will rise from £6000-£15,000;
• the limit for ISA contributions will be increased to £20,000 and new, government-subsidised lifetime ISAs will be introduced for the under 40s, with the government contributing £1 for every £4 saved up to £4000; and
• a sugar levy on the soft drinks industry is to be introduced in 2018. There will be no increase in duty on fuel, beer, cider or spirits. Duty on wine will increase with inflation and that on tobacco by 2% above inflation.
A number of infrastructure projects were given the green light, including Crossrail 2 and also the HS3 link between Manchester and Leeds. Tolls on the Severn Bridge will be reduced by half by 2018. £700 million is to be spent on flood defences.
Mr Osborne also unveiled plans for all schools in England to become academies by 2022 and for a further devolution of powers and revenues to regional mayors.
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