George Osborne has delivered his seventh Budget as chancellor, the first for a majority Conservative government since November 1996. Here is a summary of his main announcements.
Personal taxation and pay
- New national living wage will be introduced 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 2.5 million people an average £5,000 rise over five years
- Low Pay Commission to advise on future changes to rates
- Inheritance tax threshold to increase to £1m, phased in from 2017, underpinned by a new £325,000 family home allowance
- Personal allowance, at which people start paying tax, to rise to £11,000 next year. The government says the personal allowance will rise to £12,500 by 2020, so that people working 30 hours a week on the minimum wage do not pay income tax
- The point at which people start paying income tax at the 40p rate 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.
- Subsidies for social housing will be phased out with local authority and housing association tenants in England who earn more than £30,000 – or £40,000 in London – having to pay up to the market rent
- 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 new claimants who are deemed able to prepare for work to be “aligned” with Jobseeker’s Allowance
- Green Paper published on proposals for “a radical change” to pension saving system
- The amount people can contribute to their pension tax-free to be reduced for individuals with incomes over £150,000
- The cost of funding free TV licences for the over-75s transferred from the government to the BBC between 2018 and 2021
- The annual household benefit cap will be reduced to £23,000 in London and to £20,000 in the rest of Britain.
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%, 2.4% and 2.4% in the following years
- One million extra jobs predicted to be created by 2020
- Deficit to be cut at same pace as during last Parliament – reaching a budget surplus a year later than planned in 2019-20
- Spending to be £83.3bn higher up to 2020 than projected before the election
- Borrowing set to fall from £69.5bn this year to £43.1bn, £24.3bn and £6.4bn before reaching 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, £5bn from tax avoidance and a £20bn reduction in departmental budgets
Alcohol, tobacco, gambling and fuel
- No rise in fuel duty this year with rates continuing to be frozen
- Major reform to vehicle excise duties to pay for a new road-building and maintenance fund in England
- New VED bands for brand new cars to be introduced from 2017, pegged to emissions for the first year.
- Subsequently, 95% of car owners will pay a flat fee of £140 a year
- Alcohol and tobacco duties not mentioned in statement
- 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, raising an estimated £1.5bn
- £7.2bn 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 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%.
- Annual investment allowance will be fixed permanently at £200,000 from January 2016
- A consultation will take place on changing Sunday trading laws
Health and education
- NHS will receive a further £8bn by 2020, in addition to the £2bn already announced)
- Student maintenance grants to be replaced with loans from 2016-17, to be paid back once people earn more than £21,000 a year
- The maintenance loan will increase to £8,200
- New university professorships to be created to mark the Queen’s 90th birthday
- £50 million to expand the number of cadet units in state schools
- Control over fire services, planning and children’s services to be handed to consortium of 10 councils in Greater Manchester
- Discussions on devolution of services to Sheffield, Liverpool and West Yorkshire
- £30m for new body, Transport for North, to promote integrated transport – including use of Oyster cards – in the north of England
- Rent-a-room relief scheme to rise to £7,500
- Government to spend 2% of GDP on defence every year, meeting Nato target
- Spending on defence to rise in real terms – 0.5% above inflation – every year during the Parliament
- New £1.5bn Joint Security Fund for investment in military and intelligence agencies
- Recipients of the Victoria Cross and George Cross will see annual pension annuities rise from £2,129 to £10,000, paid for by bank fines.
- Government to fund memorial to victims of terrorism overseas
BBC News 08July 2015