George Osborne has delivered the 2012 Budget; he opened by saying that the Budget would “reward work” and that Britain “is going to earn its way in the world”.
He also said that it was a Budget for families and was “unashamedly on the side of business and aspiration.”
So, what were the main points? How will you be affected?
The main headlines were created by two announcements on Income Tax, so let’s start there.
The Chancellor announced the largest ever increase in the Personal Allowance to £9,205 from April 2013. The Chancellor said that 24 million people earning below £100,000 per year would benefit.
The Chancellor announced that the 50p tax rate raised £1 billion, only a third of the amount predicted.
The top rate of Income Tax will be reduced to 45p from April 2013.
Tax system will be simplified for pensioners by “doing away” with age related Personal Allowances, although Mr Osborne said this would be neutral in cash terms due to rise in Personal Allowance.
From 2014 taxpayers will start to get an annual statement showing tax and National Insurance payments made and where these are spent.
The Chancellor announced plans to deal with the anger created by the announcement last year that Child Benefit would be withdrawn where one member of a household had earnings above £42,000.
Child Benefit will now only start to be withdrawn when a member of the household earns more than £50,000 and then will be gradually reduced by 1% for every £100 of earning over £50,000.
The new measure means that all Child Benefit will not be lost until an earner has income above £60,000.
Corporation Tax rate will be reduced to 24% from next month.
Further cuts over the next two years will see Corporation Tax rates falls to 22%, with a hint that a target rate of 20% could be achievable.
The Bank Levy will be increased so banks do not benefit from lower Corporation Tax rates.
Stamp Duty on residential properties worth more than £2 million and bought by a company will rise to 15%.
Stamp Duty on residential properties above £2 million bought personally will rise to 7%.
Capital Gains Tax will be introduced on residential property held in a “corporate envelope”.
The State Pension age will be automatically reviewed to ensure it keeps pace with increasing life expectancy, more details will be announced in the summer.
A single tier basic State Pension will be introduced for future retirees at a minimum of £140 per week.
The Chancellor announced a limit on all uncapped income tax reliefs, including for pensions. For anyone seeking to claim tax relief the limit will be £50,000 or 25% of their income, whichever is higher.
Alcohol & Tobacco
No changes will be made to duty on alcohol.
Duty on all tobacco products will rise by 5% above inflation, equivalent to 37pence rise per packet of cigarettes.
No changes to fuel duty plans, which means the 3p per litre rise will go ahead.
24 Enterprise Zones have already set up; enhanced Capital Allowances will be available in certain areas with Enterprise Zones set up in Wales and Northern Ireland.
“Major savings” in administration costs for business were promised, although these were not specifically identified.
In response to this summer’s Olympics and Paralympics the Sunday trading rules will be relaxed for eight Sundays starting on July 22nd.
Small firms, with a turnover of up to £77,000 to be taxed on a “cash basis”, making tax calculations simpler for smaller firms.
Regional pay rates for the public sector are to be looked at by the Independent Pay Review body.
The Office for National Statistics (ONS) release figures to show that borrowing in February was £15.2 billion, up nearly £9 billion on the same time last year.
The Treasury responded by saying that overall borrowing for 2011/12 would now be closer to the forecast figure of £127 billion and that total UK debt is now £995 billion, equivalent to 63.1% of GDP.
Despite these figures Mr Osborne reported that the Office for Budget Responsibility (OBR) expects the UK to avoid a double dip recession and has slightly increased its projections for growth in 2012 to 0.8%, 2% in 2013, 2.7% in 2014 and 3.0% in 2015 and 2016.
The OBR also expect unemployment to peak this year and then start to fall.
Inflation is expected to continue to fall.
A further £10 billion of welfare savings will be needed by 2016.