UK chancellor George Osborne has taken to the dispatch box to present a crowd-pleasing, what was in effect the last, Budget of this parliament by claiming it was for ‘the makers, the doers and the savers’.
After weeks of buildup and much speculation about the contents of this year’s Budget Statement, chancellor George Osborne finally took to the dispatch box in the House of Commons this afternoon (March 19th) with what amounted to a pre-election Budget.
Today’s announcement was effectively the final Budget of this parliament, and there were clearly some decisions included as pure crowd-pleasers. Mr Osborne said, “This is a Budget for the makers, the doers and the savers.” And it certainly seemed like one.
Inheritance tax is to be waived where emergency services workers have died in the course of duty, while tax on beer was cut by another 1p per pint. Taxation on bingo was slashed in half.
None of these were necessarily expected, but there were other changes that surprised plenty of analysts. Income tax may have been one of the most anticipated targets of today’s announcement, but instead it was savers who received an unexpected boost.
For instance, the rules governing ISAs will be changed so that rather than separate cash and shares accounts, savers will be able to access a single combined Isa with a much higher £15,000 tax-free limit. For those with tax-paying savings accounts, the 10p tax rate has been abolished.
Pensioners also stand to gain from radical changes to the retirement income market, which will mean they no longer need to take out an annuity. Instead, they will be able to cash whatever proportion of their retirement pot they choose, as the high 55 per cent rate of tax on funds drawn out of a pension pot will be replaced with the standard income tax rate.
Mr Osborne has also announced a rise in the Annual Investment Allowance (AIA) to give some impetus to flagging levels of investment. The rise was dramatic, too – AIA will double from £250,000 to £500,000.
Capital allowance extensions in enterprise zones have been extended for three years – well into the next parliament – and the current scheme offering business rate relief will continue over the same period. Still, calls continue for a fundamental overhaul of the business rates system to render the discounts obsolete.
Businesses have broadly welcomed this year’s Budget, but it will take time before the full details of all the new measures filter out. For now, at least, it seems the ruling government has done its best to consolidate its support from traditional corners ahead of next year’s election campaign.
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