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Penny off a pint, cheaper whisky, but no gimmicks – all you need to know about the budget

Penny off a pint, cheaper whisky, but no gimmicks – all you need to know about the budget

🕔18.Mar 2015

George Osborne spreads breaks around in his pre-election budget, with an above-inflation increase in personal allowances, a penny off a pint of beer and a two per cent cut in tax on spirits.

The Chancellor scrapped a planned increase in fuel duty which he claimed would save motorists £10 every time they filled up and took 95 per cent of people out of the savings tax.

Insisting that his economic plan was delivering growth, Mr Osborne declared: “The critical choice for British people is to return to the chaos of the past or go on working on a plan that is delivering.”

He spoke of a “truly national recovery” and said Britain was moving from austerity to prosperity.

But his speech did not impress Labour.

Ed Miliband said Mr Osborne had delivered a budget the British people would not believe from a Government they did not trust.

The Chancellor announced a £60 million grant to develop an energy research accelerator in Birmingham, and declared: “The Midlands is an engine of manufacturing growth. So we are today giving the go-ahead to a £60m investment in the new Energy Research Accelerator and confirming the new national energy catapult will be in Birmingham.”

Greater Manchester was given a huge boost when Mr Osborne revealed the combined authority was to be permitted to keep 100 per cent of business rates growth, and said “the door is open” for other councils to approach the Treasury for a similar deal.

A well-trailed announcement allowing pensioners to sell poorly-performing annuity policies lay at the heart of the budget as the Chancellor sought to tie up the “grey vote” ahead of the General Election on May 7.

The speech also featured announcements on a new Help to Buy ISA, online tax accounts and a crackdown on tax avoidance by multinational companies.

The budget speech in full.

The main budget headlines:

Business and Employment

  • Increasing UK Trade & Investment’s resources to double the support for British exporters to China
  • Abolish National Insurance for those employing an apprentice from next April. After abolishing it for under 21s this April
  • Abolish Class 2 National insurance for self-employed entirely
  • Cutting beer duty by 1p; cider duty down by 2 per cent; Scottish and spirits down by 2 per cent and wine duty frozen
  • Personal tax free allowance rise to £10,800 in 2016 and £11,000 in 2017
  • The 40p threshold will rise above inflation to £43,300 by 2017/18
  • A new personal savings allowance to take 95 per cent of taxpayers out of savings tax. From April 2016, first £1,000 on savings from earnings will be tax free and the upper tax payers allowance will be set at £500

Financial Services, Spending and Borrowing

  • The  number of long-dated gilts that the government sell will increase and the last remaining undated British Government bonds in circulation will be redeemed
  • Launching sale of £13bn mortgage assets held from Northern Rock and Bradford and Bingley. The Chancellor said the money would be used, as well as lower interest payments, to pay down the national debt
  • Selling £9bn at least of Lloyds Bank shares in coming year
  • Debt as share of GDP to start falling in 2015/16, a year earlier than expected
  • In 2019-20, public spending will grow in line with the growth of the economy
  • Government spending as a proportion of GDP will be at the same level as 2000 by the end of the next Parliament
  • £30bn further savings to be achieved by 2017-18, which will include  £13bn of savings from government departments, £12bn from welfare savings and £5bn from tackling tax avoidance and evasion
  • The share of income tax paid by the top 1 per cent of taxpayers is projected to rise from 25 per cent in 2010 to over 27 per cent this year
  • Lifetime pension relief allowance reduced from £1.25m to £1m, allowanced to be indexed from 2018
  • Legislating for the new Common Reporting Standard on tax avoidance
  • Conducting a review on avoidance of inheritance tax on use of deeds of variation and report by autumn 2015
  • Raising the rate of the bank levy to 0.21 per cent, to raise an additional £900m a year.
  • Libor fines will contribute another £75m to armed services charities, including a memorial for Afghanistan veterans.
  • Charities will be able to claim automatic Gift Aid on the first £8,000 of small donations, up from £5,000
  • Abolish annual tax return altogether and updated online tax accounts to manage complex accounts online
  • Allow police and firefighter widows to remarry without facing a pension penalty
  • A new Help to Buy ISA will be introduced, for every £200 saved for a housing deposit, the government will contribute £50 more
  • A “radically” more flexible ISA to give complete freedom to tax money out, and put it back in later in the year, without losing any tax-free entitlement
  • Rate of new transferable married couples tax allow to rise £1,100
  • Give five million pensioners access to their annuity, the next year punitive tax charge will abolished and only charged at the marginal rate
  • Increasing the rate of the bank levy (one of the taxes that banks pay) from 1 April 2015
  • A new £1 coin will be released

Education and Skills

  • £140m funding for world class research across UK
  • Loans up to £25,000 will be available for postgraduate PHD and masters research students
  • The government will also conduct a review into how the government can strengthen its funding for postgraduate research.

Culture, Arts and Media

  • New horse race betting right
  • Expand support for video games industry
  • Changes to TV and film tax credits
  • New tax credits for orchestras
  • A consultation on tax support for local newspapers

Energy and Environment

  • Farmers will be allowed to average out their income over five years for tax purposes
  • The West Midlands’ Energy Research Accelerator gets £60m, with new national energy catapult to be based in Birmingham
  • Opening negotiations for the tidal energy project in Swansea Bay
  • Compensation package for energy intensive industries brought forward
  • £1.3bn of support for the oil and gas industry
  • A new “a single, simple and generous tax allowance to stimulate investment at all stages of the industry” for the oil and gas industry.
  • From next year, the Petroleum Revenue Tax will be cut from 50 per cent to 35 per cent to support continued production in older fields
  • Cutting the Supplementary Charge from 30 per cent to 20 per cent, and backdating it to the beginning of January
  • Reducing oil and gas taxes to increase competitiveness in the North Sea
  • Investment in new seismic surveys in under-explored areas of the UK Continental Shelf

Science, Research and Defence

  • Libor fines will contribute another £75m to armed services charities, including a memorial for Afghanistan veterans.
  • More money for security services against terrorism
  • National research institutes get budget freedoms
  • £25m will be provided to help the UK’s eldest veterans, including nuclear test veterans
  • £140m for world-class research across UK into the infrastructure and cities of the future

Health, Social Care and Welfare

  • £1.25bn for children’s’ mental health services and new mums
  • £1m investment for defibrillators in schools and public places
  • Blood bike charities to be exempt from VAT
  • Further funding for air ambulances
  • Charities to be able to claim automatic Gift Aid on the first £8,000 of small donations, up from £5,000

Transport and Infrastructure

  • A comprehensive transport strategy for the North, due to published next week
  • New rail franchise for the South West, with £7bn of investment in roads and air links
  • Abolish higher bands for vans and buses
  • Expanding broadband vouchers to more cities
  • Committing to a national ambition to 100 megabits per second to nearly all homes in Britain
  • Provide funding for Wi-Fi in public libraries and Wi-Fi vouchers for cities
  • £600m to improve mobile phone networks and reach all communities
  • Cancelling the fuel duty increase scheduled for September
  • £100m investment in driverless technology
  • Increase company car tax more slowly than previously planned
  • The Severn Crossing’s toll rates will be cut from 2018

Local Government and Housing

  • Treble funding for church roof appeals
  • New City Deal for combined West Yorkshire Com Authority
  • 100 per cent business rate growth to be kept for Manchester Combined Authority, Cambridge and surrounding councils. The door is open to other councils to approach the HM Treasury for the same deal
  • Confirming first twenty housing zones, and creating eight enterprise zones
  • New powers for the Mayor over skills and planning
  • New funding for the London Land Commission to help address the acute housing shortage in the capital
  • Introduce a new Help to Buy ISA

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