Wednesday, 23 March 2011

The Budget

Today our Chancellor, George Osborne gave his second budget. Last year’s emergency budget was about rescuing the nation’s finances and paying for Labour’s mistakes. Today he stated that it was about two things; reforming the economy to ensure jobs and growth for the future and doing what we can to help families with the cost of living.

So what has been proposed in order to help people do this?

-   Cutting income tax by an average of £48 for millions, cutting fuel duty immediately, postponing Labour’s planned increase this April and taxing oil companies more to stop future inflation rises in duty

-    Boosting manufacturing, growth and jobs by cutting tax for businesses and entrepreneurs; scrapping burdensome regulations; radically reforming the planning system; investing in science and innovation; and providing more support for young people with an additional 50,000 apprenticeships and 100,000 work experience places. Britain will make things again.

Measures include:

1)   An extra 1% cut in corporation tax from April 2011, taking corporation tax from 28% to 26%

2)   Sweeping changes to the generosity, simplicity and reach of the Enterprise Investment Scheme, with an increase in the income tax relief available from 20% to 30%; plus a doubling the size of the Entrepreneurs Relief to £10 million.

3)   An extension of the small business rate relief holiday until October 2012 – over half a million eligible businesses will continue to benefit from reductions in their bills, with approximately 330,000 businesses paying no rates at all.

4)   Support for innovation and manufacturing with an additional £100 million this year for new science facilities, and an increase in the SME rate of Research and Development Tax Credit to 200% from April 2011, and 225% from April 2012.

5)   21 new Enterprise Zones with up to 100% business rate discount, new superfast broadband and the potential to use enhanced capital allowances for zones with a strong focus on manufacturing.

6)   £2 billion pounds extra for the Green Investment Bank

7)   Simplification of the tax system by consulting on options for integrating the operation of income tax and national insurance contributions and plans to scrap 43 tax reliefs.

8)   Radical reforms to planning and regulation to support economic development – including a presumption in favour of sustainable development, scrapping existing regulation that costs businesses £350 million a year and a moratorium on all new domestic regulation for firms with fewer than 10 employees.

9)   A new £250 million shared equity scheme, First Buy, that in England will help 10,000 first time buyers get on the housing ladder for the first time.

10)    50,000 additional apprenticeships, meaning that over the next four years at least 250,000 more apprenticeships will be funded; 100,000 work placements for young people; and a doubling of the University Technical Colleges programme to create at least 24 new colleges.

11)    1 penny per litre cut in fuel duty from 6pm tonight,

12)    A further increase in the personal allowance of £630 in April 2012, taking 260,000 more people out income tax and reducing the tax paid by 25m people by an average of £48, without creating any more higher rate taxpayers. Together with the £1,000 rise happening this April, that means a total of £326 extra each year. altogether.

13)    A switch to CPI indexation for direct taxes – bringing them in line with benefits. For the duration of this Parliament, there will be annual increases in the employer NICs threshold and the age related allowances will increase by the equivalent of RPI.

14)    A crackdown on tax avoidance to raise an extra £1 billion a year by closing down schemes which disguise remuneration, and avoid corporation tax, VAT and stamp duty

15)    A greater contribution from non-doms who have been in the country for 12 years by increasing their annual charge to £50,000.

16)    An HMRC led investigation into how much revenue is raised by the 50p rate of income tax – which the Chancellor regards as a temporary measure

17)    A commitment to publish a green paper on state pension reform, including an option for a simple, contributory single tier pension around £140 per week for future pensioners

18)    Confirmation that the Government will consult on reforms to public service pensions on the basis of Lord Hutton’s recommendations that over time public sector workers should be expected to work longer, receive a defined benefit pension based on career average earnings and that accrued rights should be protected

19)    A 10% cut in inheritance tax for estates leaving 10% or more to charity. No beneficiaries will be better off, but we expect charities to gain £300 million.

20)    Introduction of a new scheme where Gift Aid can be claimed on small donations, up to a total of £5,000 a year, without the need for donors to fill in any forms. 

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