The 2011 Budget: round up
In his first full Budget, chancellor George Osborne says the country can now move on the "Route from rescue to reform".
Having already received what was asked of the British public, Osborne says there’s no need to ask any more.
He says the last government "gambled on a debt-fuelled model of growth that failed."
"Britain has a plan and we are sticking to it."
Osborne pledges no new tax increases or spending cuts
He recognises the need to help for families with living costs and price of oil
The annual growth forecast for 2011 has been revised from 2.1% to 1.7% - blaming a weak fourth quarter. The OBR says this "Creates scope for slightly greater economic growth in years to come." It is forecast to rise to 2.5% next year, 2.9% in 2013 and 2014 and 2.8% in 2015.
2% target of inflation for MPC remains. OBR expects inflation for 2011 to remain between 4% and 5%.
Forecast borrowing of £146 billion this year, £2.5 billion lower than anticipated
Borrowing to fall to £101 billion in 2012, dropping to £29bn by 2015-16
Treasury reserves will meet the financial cost of intervention in Libya.
The government is unable to replenish its gold reserves because the price now resides at record highs, while Labour sold those off at a record low.
"Growth again the key." Private sector growth must take the place of government deficit.
"Vision for growth: Difficult decisions needed," says Osborne.
Four goals to turn UK into... the most competitive tax system in G20, the best place to start a business with a stable economy and more educated workforce.
The Chancellor vowed to raise personal allowance by £630 to just over £8,105 in April 2012.
Consultation on long-term plan to merge income tax and National Insurance: "purpose is not to increase taxes, it’s to simplify them."
Osborne has declared that the 50% tax rate should be a temporary measure as a permanent move would damage the UK economy.
Abolition of 43 complex reliefs.
From April 2012 – CPI to be used as index for direct tax.
Corporation tax will be reduced by 2% rather than 1% from April this year and will continue to fall by 1% in each of the following three years. Bank levy to be adjusted so banks do not pay less tax as a result
Non-domiciles charge increased to £50,000 for those residing for 12 years or longer in the UK.
"When soaring oil prices send pump prices rising, it’s important a government listens to its people."
A fair fuel stabiliser – from tomorrow, the supplementary charge on oil production upped from 20% to 32%. Will raise a further £2 billion in revenue.
The fuel duty escalator is scrapped for the remainder of the parliament and there will be no duty rise this year unless oil price falls below $75 a barrel.
Cutting fuel duty by 1p per litre – in place from 6pm tonight.
"Small businesses are the innocent victims of the credit crunch," says Osborne.
Income tax relief for small companies to increase from 20% to 30%.
15% rise in availability of credit to small businesses.
Rate holiday for small businesses extended by another year (at cost of £300 million to Treasury).
£350 million of business regulation to be scrapped and no new regulation on firms with fewer than 10 staff for three years.
New planning rules to require planners to prioritise growth and jobs.
£100m funding for science facilities.
21 "enterprise zones" to be launched, backed by tax incentives.
Enterprise Investment Schemes undergo changes: income tax relief extended for EIS schemes up from 20% to 30%.
Value of investment in one company upped 400%.
Simplification of state pension scheme: single-tier pension estimated to be worth £140 a week – but it will take time to be fully implemented and won’t impact current pensioners.
Funding for 12 further university technical colleges.
40,000 new apprenticeships created for young people out of work.
Funding established for 100,000 work experience placements.
Cigarettes and alcohol to increase in line with previous governement's announcements.
First time buyers
£250 million commitment to first-time buyers: 10,000 families who can’t afford high deposits helped onto the property ladder by this scheme.
Osborne says the government wants to be the ‘greenest government ever’.
Incentives for investment in green energy.
Creation of Green investment bank – to support low-carbon investment helping it to begin operating a year earlier in 2012. In total, the bank will have access to up to £3 billion of funds.(£1 billion already committed and £2 billion more committed today).
£100 million to repair potholes in England
£200 million in support for regional railways in England
Public money to help those in south-west England forced to pay high water bills due to the geography.
Simplification of the administration of GiftAid (by 2013 pay for an easier online system).
GiftAid threshold upped from £500 to £2,500.
IHT – Where 10% or more of an estate is left to charity, the government will take 10% of the IHT charge. No heirs will benefit – only the charities. "I want to make giving to charity the norm for our country" says Osborne.
Training for the most financially impoverished students.
Increase to 100,000 places over its work placement scheme.
This article was written for Interactive Investor
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
The Consumer Price Index is the official measure of inflation adopted by the government to set its target. When commentators refer to changes in inflation, they’re actually referring to the CPI. In the June 2010 Budget, Chancellor announced the government’s intention to also use the CPI for the price indexation of benefits, tax credits and public sector pensions from April 2011. (See also Retail Prices Index).