The Budget 2016

Brief case 4The 2016 Budget was a announced on 16th March by the Chancellor of the Exchequer, George Osborne.

PLEASE NOTE:  This snapshot is not intended as an in-depth analysis of the Chancellor’s speech, but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the Dispatch box.

Forecasts

  • The Chancellor announced adjustments to previous growth forecasts from those previously announced in the 2015 Autumn Statement & Spending Review.
    • Growth forecast for 2016 – revised down from 2.4% to 2.0%
    • Growth forecast for 2017 – revised down from 2.5% to 2.2%
    • OBR borrowing forecast revised up from £49.9bn to £55.5bn for 2016/17 (taking account of new statistical data) / borrowing forecast at £38.8bn in 2017/18
    • OBR states national debt now 82.6% of GDP (taking account of new statistical data) for 2016/17
    • OBR forecasts lower inflation for 2016 (1% down to 0.7%) and 2017 (1.8% down to 1.6% )
  • OBR says an EU ‘Leave’ vote could usher in an extended period of uncertainty

Taxation / Welfare / Finance

  • Personal allowance to rise to £11,500 from 2017
  • Higher rate of tax threshold to increase to £45,000 from 2017
  • ISA limit increase from 2017 to £20,000
  • Lifetime ISA to be introduced – Available to those under age 40 from April 2017 – save up to £4,000 each year and Government will give £1 for every £4 saved – An alternative to pension contributions. Help to Buy ISA can be rolled into the Lifetime ISA
  • New rules to be introduced for large corporate multi-nationals in an attempt to ensure companies pay appropriate tax.
  • New rules to prevent offshore companies storing goods in the UK but selling online and not paying VAT.
  • Corporation Tax to be cut to 17% by April 2020
  • Small business rate relief thresholds to be more than doubled
  • Commercial stamp duty to have a 0% rate up to £150,000 (other additional bands apply and come into effect from midnight on 16th March)
  • Supplementary charge on oil and gas cut by half to 10%
  • Standard rate of Insurance Premium Tax to be increased by 0.5%
  • Class 2 NI contributions to be removed
  • Capital Gains Tax to be cut to 20% in certain circumstances

Education / Child Welfare

  • Extra funding committed so that by 2020 all primary and secondary schools will be, or will be in the process of becoming, an Academy
  • New white paper to follow shortly with further education initiatives
  • Sugar Levy to be introduced on soft drinks industry. To be introduced in 2 years’ time to allow companies time to amend content of their products.
  • ‘Sugar Tax’ to be redirected to encouraging sport participation in primary schools
  • Libor funds to be directed towards children hospital care

Excise Duty

  • Fuel duty frozen for sixth year in a row
  • Beer duty and cider duty frozen
  • Duty frozen on Whiskey and other spirits
  • Tobacco duty to rise by 2% above inflation from 16th March

Transport / Infrastructure

  • HS 3 and other major projects to be implemented across the Northern Powerhouse
  • Government will commission Crossrail 2 for London
  • More support for flood defences

Devolution

  • More devolution to be introduced, giving more responsibility to Scotland, Wales & Northern Ireland
  • More devolution for Northern Powerhouses to include election of mayors and a handover of certain responsibilities to local control, including new justice powers for Greater Manchester.

Housing

  • South West of England initiative to assist young house buyers in the area
  • £150m package to reduce homelessness and rough sleeping

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