The facts below are extracts from the Budget Speech delivered by the Chancellor George Osborne . No responsibility can be accepted for anyone taking or refraining from taking actions based upon the notes below. The Budget will be ratified later in the year through the Finance Act
The Chancellor promised not to rattle through growth figures – he said average quarterly growth will be higher than forecast – but the annual forecast will be revised down to 1.7%.
Going through the new forecasts from the Office for Budget Responsibility, he said growth is predicted to be 1.7% for 2011, 2.5% next year, 2.9% in 2013, 2.9% in 2014 and 2.8% in 2015.
Mr Osborne said inflation is expected to be between 4% and 5% this year – dropping to 2.5% next year and 2% in two years’ time.
Borrowing for 2011 will be £146bn – below target he confirmed.
Borrowing is expected to fall to £122bn next year, the chancellor reported and will continue to fall until it reaches £29bn in 2015/6.
Mr Osborne says the government will consult on merging National Insurance and Income Tax. The goal, he says, is to simplify them – not to increase taxes. It will make the tax system “fit for the modern age”, he said, but it will take years to implement.
Corporation Tax is to be cut by 2% – more than the 1% previously announced. It will be the lowest in the G7.
Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April 2011.The clear aim seeming to be reinforcing the
The top 50% tax rate was regarded as a “temporary measure” but it is to remain for the time being. “We are all in this together.” said Mr Osborne.
The “non-domiciled” charge is being increased to £50,000 for those who have been in the country 12 years – raising more than £200m.
Profits from the bank levy will fund a new £250m shared equity scheme for first-time buyers – which will help 10,000 families get onto the housing ladder for the first time.
To support the construction industry further & reinforce the culture of enterprise, there will be 21 “enterprise zones”.
The small business rate relief holiday is being extended by one year to October 2012, at a cost of £370m, the chancellor said.
To assist the young unemployed 40,000 extra apprenticeships will be funded by Government.
Tax avoidance has been addressed whereby three forms of stamp duty land tax avoidance will be shut down.
There’ll be help for families “who do pay their taxes but who struggle with the daily cost of living”, Mr Osborne said – outlining measures such as the council tax freeze and more child tax credit for lower income families and a “pay lift” for public servants on less than £21,000.
In an attempt to help charities who have suffered lower donations during the last two years, it was announced that if people leave 10% of their Estate to charities then the rate of Inheritance Tax will reduce by 10%.
The chancellor confirms a rise in the personal tax allowance, which had been widely discussed. A two year staged rise will take the personal allowance first to £7475 and then to £8105 for 2012/13.
Finally the Chancellor turned to Fuel Duties – it had been due to go up by 1p a litre above inflation next week, but Mr Osborne said a government has to “listen and respond” when oil prices rise. While revenues go up when the oil price rises, other tax intake falls, he says. He dismissed a proposal to cut the VAT rise on fuel – which went down well with his colleagues. He said a “fair fuel stabiliser” will be introduced from Thursday, which will raise an extra £2bn. The money will be used to delay the duty rise until next year.