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Budget 2015: Fuel duty increase scheduled for September cancelled

Mr Osborne has urged Northern Ireland parties to commit to the Stormont House Agreement

By Claire Williamson and Andrew Grice

George Osborne is setting out his tax and spending plans to MPs in his final Budget before the general election.

The key points:

  1. Corporation Tax: Chancellor urges Northern Ireland parties to commit to Stormont House Agreement of which it is part
  2. Fuel duty increase scheduled for September cancelled
  3. Income tax personal allowance to rise to £10,800 next year and £11,000 the year after, making typical working taxpayer £900 a year better off and cutting tax for 27 million people
  4. Beer duty reduced by 1 p. 1% off beer duty, cider duty cut 2% and spirit duty cut by 2% Wine duty frozen
  5. Annual tax return to be abolished
  6. £30bn of further savings necessary by 2017/18
  7. Minimum wage on course to become more than £8 by the end of the decade

Budget 2015 Statement points:

  • The Chancellor concluded his statement saying: "this is the Budget for Britain, the comeback country"
  • New personal savings allowance from April next year means first £1,000 of interest on savings will be tax-free
  • Annual savings limit for ISA increased to £15,240 and fully flexible ISA created. New Help to Buy ISA for first-time buyers allows Government to top-up by £50 every £200 saved for a deposit.

Tax Changes

  • Law change to allow pensioners to access their annuities, with 55% tax charge abolished and tax applied at the marginal rate.
  • Transferable tax allowance for married couples to rise to £1,100.
  • Above inflation rise in threshold for 40p income tax rate from £42,385 this year to £43,300 by 2017/18.
  • Income tax personal allowance to rise to £10,800 next year and £11,000 the year after, making typical working taxpayer £900 a year better off and cutting tax for 27 million people
  • Fuel duty increase scheduled for September cancelled
  • Beer duty reduced by 1 p. 1% off beer duty, cider duty cut 2% and spirit duty cut by 2% Wine duty frozen
  • Annual tax return to be abolished
  • Support totalling £1.3 billion for oil industry includes cut in petroleum revenue tax from 50% to 35% next year and in supplementary charge from 30% to 20%, backdated to January.
  • In two weeks time will cut corporation tax to 20%

Transport investment

  • Negotiations opened on Swansea Bay tidal lagoon and Severn Crossing toll rates reduced from 2018.
  • Introduction of the first 20 housing zones for construction and extension of eight enterprise zones across Britain, with new zones in Plymouth and Blackpool.
  • Transport investment of £7 billion in the South West, including new intercity rail franchise.
  • Support for automotive industry including investment of £100 million for driverless technology and reduced rate of increase in company car tax for low-emission vehicles - with other vehicle rates rising by 3% in 2019/20.
  • Go-ahead for £60 million investment in energy research accelerator in the Midlands, with new national energy catapult to be in Birmingham.
  • Support for North of England includes transport strategy for the North, funds for Health North initiative and agreement of new city deal for West Yorkshire Combined Authority. Greater Manchester to be allowed to keep 100% of growth in local business rates.
  • Trebling in £15 million fund for church roof appeals, and extension to £8,000 in automatic gift aid to benefit 6,500 small charities.

 

Northern Ireland

  • Corporation Tax: Urges Northern Ireland parties to commit to Stormont House Agreement of which it is part

Pensions/older people

  • New funds for veterans and regimental charities
  • Banks to be barred from deducting compensation for mis-selling from corporation tax. In total, new banking taxes to raise £5.3 billion across forecast period.

Tax rules

  • Tax rules to be tightened to prevent contrived loss arrangements, use of foreign branches to reclaim VAT on overheads, clampdown on "umbrella companies" and ensure entrepreneurs relief is only available to those selling genuine stakes in businesses.
  • Government to legislate next week on diverted profits tax aimed at multinationals shifting profits offshore, and bring it into effect at the start of April.
  • New diverted profits tax to come into effect next month
  • This country's tolerance for those who will not pay their fair share of taxes have come to an end
  • Cut in lifetime pension allowance from £1.25m to £1m next year saving £600 million annually
  • Income tax paid by top 1% projected to rise from 25% to 2010 to 27%

Savings

  • Savings to come from 13bn from government departments and 12bn from welfare savings
  • Compared to five years ago inequality is down, child poverty is down, youth unemployment is down, pensioner poverty is in its lowest ever, pay day loans are capped, zero hours contract regulated
  • £30bn of further savings necessary by 2017/18
  • If we deviate from this path the national debt share will not keep falling, it will start rising again

Public borrowing/deficit

  • 2019 public spending will grow in line with growth of economy
  • Borrowing forecast for this year revised downwards to £90.2 billion, then £75.3 billion in 2015/16, £39.4 billion, £12.8 billion in subsequent years - a total of £5 billion less borrowing than forecast in December.
  • Deficit forecasts from Autumn Statement revised downwards to 4% in 2015/16, 2% in 2016/17 and 0.6% in 2017/18. Budget surplus of 0.2% forecast for 2018/19 and 0.3% for 2019/20.
  • Squeeze on public spending to end a year earlier than planned, so that in 2019/20 spending grows in line with the growth of the economy - bringing state spending as a share of national income to the same level as in 2000.
  • Debt as a share of GDP falls from 80.4% in 2014/15 to 80.2% in 2015/16, then 79.8%, 77.8% and 74.8% in subsequent years before reaching 71.6% in 2019/20.
  • Original 2010 debt target met
  • Welfare bills set to be an average of £3 billion lower each year than predicted in December, and interest charges on Government gilts £35 billion lower.
  • Treasury pays off debts from South Sea Bubble, First World War and Gladstone era and increases the number of long-dated gilts it sells.
  • Farmers to be allowed to average incomes for tax purposes over five years.
  • Remit for Bank of England monetary policy committee remains a 2% symmetric CPI inflation target.
  • OBR revises down inflation forecast for this year to 0.2%, and revises it down for the falling three years.
  • Mr Osborne said that people are better off at the end of this Parliament than five years ago, with GDP per capita up by 5% and real household disposable income higher in 2015 than 201
  • Average household around £900 better off in 2015 than 2010, with living standards set to grow strongly every year until 2020, said Mr Osborne.

Minimum wage

  • Minimum wage on course to become more than £8 by the end of the decade
  • Lowest inflation on record

State of the economy

  • Unemployment to fall to 5.3 % this year
  • Massive moment Britain has highest rate of employment in history. Claimant account at its lowest point since 1975. Unemployment today fallen by another 100,000.
  • We are replacing the disastrous economic model we inherited
  • Office for Budget Responsibility confirms that, at 2.6% UK growth faster than any other major economy last year.
  • OBR revises forecast growth for 2015 upwards from 2.4% in Autumn Statement to 2.5% now. Forecast for 2016 revised upwards to 2.3%, then 2.3% in 2017 and 2018 and 2.4% in 2019.
  • Trade deficit figures are the best for 15 years
  • Government's goal is for the UK to be "the most prosperous major economy in the world, with that prosperity widely shared", said the Chancellor.
  • The "central judgement" of the Budget is "to use whatever additional resources we have to get the deficit and the debt falling".
  • British economy economically stronger
  • Mr Osborne said that "Britain is walking tall again" with faster growth than any major economy.
  • Latest projections show living standards "will be higher than when we came to office", said the Chancellor.

 

The Coalition hasn't given much away ahead of its final Budget. Here are some things which will probably make an appearance

1. Savings - Virtual abolition of the tax on savings income, with only the rich paying it in future.

2. Public spending cuts

Eased in the final year of the 2015-20 parliament.

3. Personal tax allowance

Amount of tax-free income, due to rise to £10,600 next month, likely to be £11,000.

4. Pensioners

The 5m people who have already bought annuities will be able to sell them and spend the money; possible cut in tax relief for high earners on their pension pots by reducing the £1.25m lifetime allowance.

5. Tax avoidance and evasion

“Google tax” on multinationals which move profits to low-tax countries to avoid tax; new offence of economic crime – helping people evade tax, aimed at bankers and accountants.

6. North Sea Oil

Tax help for firms to head off job losses due to falling global price of oil.

7. Beer

A possible cut in beer duty.

8. Petrol

Possible freeze in fuel duty despite falling prices.

9. Northern Powerhouse

An Oyster-style transport card for the North like the one in London; electrification of the Selby to Hull line; investment in the chemical sector in the North East.

10. Broadband

To introduce ultra-fast broadband around the UK.

11. Housing

45,000 new homes to be built on brownfield sites.

12. Industry

Support for technology clusters around the UK; two new “enterprise zones” in Plymouth and Blackpool.

Source Independent

Budget: Osborne to scrap tax on savings to woo pensioners

Independent News Service

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