Today (March 16) the Chancellor of the Exchequer George Osborne has announced his eighth Budget for this year.
These are some of the key announcements:
- Some of Osborne’s key announcements will affect the education sector, as he proposed to double the dedicated funding for sport in primary schools that will be paid for by a levy on soft drinks.
- Osborne also announced that soft drinks companies will have to pay a levy on drinks with added sugar from April 2018.
- The levy will apply to drinks with total sugar content above 5 grams per 100 millilitres, with a higher rate for more than 8 grams per 100 millilitres. This won’t need to be paid on milk-based drinks or fruit juices.
- The levy will be used to double the primary PE and sport premium – the additional money schools have to spend on PE and sports- to £320million a year.
- Osborne also proposed a longer school day for 25 per cent of secondary schools. Schools will be able to opt in to this from September 2017. This means that schools have the option to offer a wider range of activities for pupils. There will be up to £285m a year to pay for this.
- Osborne would also like every school in England to be an academy or free school – or be in the process of becoming one by the end of 2020. It is reported that this will give head teachers more control over the curriculum they teach and their budget.
- The current system for funding schools will also be replaced by a fairer national funding formula from April 2017.
- There will be £20m a year in additional money for schools in the north of England.
- In business and finance – Osborne proposed the lifetime ISA. This is a new £4,000 ISA that people can use to save for retirement – or to buy their first home. Any adult under the age of 40 will be able to open a lifetime ISA, from April 2017.
- Up to £4,000 can be saved each year and savers will receive a 25 per cent bonus from the government on this money. Money put into the account can be saved until a person is over 60. The total amount a person can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017.
- The deficit will have been eliminated and the Government will be running a surplus in the next 4 years– where more tax is raised than is spent. To help achieve this, there will be a further £3.5billion of savings from departmental spending in 2019 to 2020. There will be an efficiency review to inform future spending decisions.
- The Personal Allowance will increase from £10,600 to £11,500 in April 2017. It is due to be raised this year to £11,000, with the higher rate of Income Tax increasing from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.
- Also from April 2017, there will also be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.
- If a person makes up £1000 from occasional jobs then they will no longer need to pay tax on that income.
- In the same way, the first £1,000 of income from property, for example renting a driveway or loft storage, will be tax free.
- The fuel duty is due to be frozen again in 2016 to 2017 for the sixth year running.
- The Government has also announced that it will make sure large companies cannot artificially shift profits out of the UK. They have proposed to do this by capping relief on interest payments at 30 per cent of UK earnings, with exceptions for groups with legitimately high interest payments. There will also be changes to the rules on interest and other measures, including introducing rules to prevent multinational companies avoid paying tax in any of the countries they do business in, taxing outbound royalty payments – which are fees for using intellectual property like patents and copyrights and making sure offshore property developers are taxed on their UK profits.
- Small businesses will also face changes as from April 2017. Small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates. There will be a tapered rate of relief on properties worth up to £15,000.
- Capital Gains Tax will also be cut from 28 per cent to 20 per cent, with the basic rate decreasing by 8 per cent to just 10 per cent. Capital Gains Tax is a tax on the gain you make when you sell something – an asset – that has gone up in value. It is paid at a basic or higher rate depending on the rate of Income Tax you pay.
- There will be an additional 8 percentage point surcharge to be paid on residential property and carried interest – the share of profits or gains that is paid to asset managers. The tax on residential property does not apply to your main home, only to additional properties.
- The main rate of Corporation Tax will be cut to 17 per cent in 2020, benefitting over 1 million businesses.
- Self-employed individuals will need to pay National Insurance contributions on pay-offs above £30,000, where Income Tax is also due. This comes into affect from April 2018.
- For people who lose their job, payments up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.
- People who are self-employed will only need to pay Class 4 National Insurance contributions from April 2018.
- After April 2018, Class 4 NICs will also be reformed so self-employed people can continue to build benefit entitlement.
- New stamp duty rates for commercial property will also be introduced from tomorrow (from March 17, 2016). From tomorrow rates will apply to the value of the property over each tax band and will be 0 per cent for the portion of the transaction value up to £150,000. This increases to 2 per cent between £150,001 and £250,000, and 5 per cent above £250,000. Buyers of commercial property worth up to £1.05 million will pay less in stamp duty. Stamp duty rates for leasehold rent transactions will also change, with a new 2 per cent stamp duty rate on leases with a net present value over £5 million.
- Tax support worth £1 billion will be proposed for the oil and gas industry, which includes abolishing the Petroleum Revenue Tax – a tax on profits from oil fields approved before 1993, which reduces the supplementary charge on oil and gas extraction.
The travel sector also faced announcements within the Budget.
Osborne announced that the HS3 between Leeds and Manchester, £60m has been announced to develop plans to cut journey times to around 30 minutes between Leeds and Manchester, as well as improving transport connections between other cities in the north.
As much as £8million has also been proposed to continue planning for Crossrail 2. The proposed route will connect South-West and North-East London, increase tube capacity and reduce the pressure on Victoria and Waterloo stations.
Other announcements were:
- Proposals of £100m to help people move on from emergency hostels and refuges. This will pay for 2,000 places to live for those who need to move on from emergency hostels and refuges, with £10m also being available for schemes that target rough sleeping.
- Duty rates on beer, spirits and most ciders will be frozen this year and more funding will be given to protect homes and businesses from flooding, which will be paid for by Insurance Premium Tax, a tax on insurers. The standard rate will rise from 0.5 per cent to 10 per cent.
- Museums and galleries will also be introduced to a new tax relief which will be available to temporary and touring exhibitions from April 2017. This will help museums and galleries create new exhibitions and display them around the UK. The government will consult on this during 2016.
- Also, from April 2017, 4,000 Armed Forces veterans will be able to keep payments from their war pensions, if they need social care.
The North East Chamber of Commerce (NECC) has responded to the recent Budget announced this afternoon (Wednesday, March 16).
Jonathan Walker, North East Chamber of Commerce (NECC) Head of Policy and Campaigns, said: “We are pleased our lobbying has helped secure a firm commitment to upgrade both the A66 and A69 which are vital links for businesses in the region. This was a key priority in our 2016 Manifesto and will help to build a more connected North East.
“However, we are disappointed the Chancellor has not heeded our calls for further detail on big reforms such as the apprenticeship levy. The Government has said it is committed to stability yet doesn’t provide businesses with sufficient detail to plan for the future.”
UNISON have also responded to the Budget.
Clare Williams, UNISON’s Regional Convenor, said:“The ongoing attacks on disabled people are disgusting and immoral; a civilised society should not tolerate this shameful situation.”
“The cuts are raining down on public services that people depend on.
“We have the extraordinary situation in Newcastle where a successful Citizens’ Advice Bureau tackling issues around household debt now risks closure.”
Ms Williams stated that UNISON was campaigning for investment in jobs, industry and growth.
UNISON was also campaigning for a ‘Robin Hood’ tax on the banking system which caused the financial crisis.
Ms Williams added: “A fair system is not for a failing Chancellor to hammer those in society who need help and local services the most. The richest should pay more and tax-avoiding millionaires and big business made to pay their fair share.”