Today, George Osbourne delivered his seventh Budget as chancellor. Some of the key points at a glance are as follows:
Business
- Corporation tax to be cut to 19% in 2017 and 18% in 2020
- Permanent non-dom status to be abolished - from April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens
- £7.2b to be raised from clampdown on tax avoidance and tax evasion with HMRC budget increased by £750m
- Bank levy rate to be gradually reduced over the next six years and a new 8% surcharge on bank profits introduced from January 2016
- Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5% from November
- New apprenticeship levy for large employers
- Climate Change Levy exemption for renewable electricity to be removed.
- National Insurance employment allowance for small firms to be increased by 50% to £3,000 from 2016
- Dividend tax credit to be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax to be set at 7.5%, 32.5% and 38.1%.
Personal taxation and pay
- Introduction of a new national living wage for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020 - giving an estimated 2.5m people an average £5000 rise over five years
- Low Pay Commission to advice on future changes to rate
- Inheritance tax threshold will be increased to £1m from 2017
- Personal allowance, at which people start paying tax, to rise to £11,000 next year
- The point at which people start paying income tax at 40p to rise from £42,385 to £43,000 next year
- Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate of income tax
Welfare and pensions
- Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017.
- Income threshold for tax credits to be reduced from £6,420 to £3,850
- Working-age benefits to be frozen for four years - including tax credits and local housing allowance, but maternity pay and disability benefits exempted
- Rents in social housing sector will be reduced by 1% a year for the next four years
- Higher-income households in social housing will be required to pay rents at the market rate
- Disability benefits will not be taxed or means-tested while state pension triple lock to be protected
- 18-21-year-olds will not be entitled to claim housing benefit automatically, with a new "earn to learn" obligation
- Employment and Support Allowance payments for claimants deemed able to work to be "aligned" with Jobseeker's Allowance for new claimants
- Green Paper published on proposals for "a radical change" to pension saving system
- Annual tax relief on pension contributions to be limited to £10,000 a year
The state of the economy
- Economy grew by 3% in 2014
- 2.4% growth forecast in 2015, 0.1% lower than predicted in March, followed by 2.3% and 2.4% in the two following years
- 1m extra jobs predicted to be created by 2020
Public borrowing/deficit/spending
- Deficit to be cut at same pace as during last Parliament - securing a budget surplus a year later than planned in 2019-20
- Borrowing set to fall from £69.5bn this year to £43.1bn, £24.3bn and £6bn before hitting a £10bn surplus in 2019-20
- Debt as a share of GDP to fall from 80.3% this year to 79.1%, 77.2%, 74.7%, 71.5% and 68.5% in successive years
- 1% public sector pay rise to continue for next four years
- £37bn of further spending cuts by 2020, including £12bn of welfare cuts and £5bn from tax avoidance
