DURING a 62 minute speech on March 16 in his third budget in 12 months, Chancellor Osborne pleased a few and irritated a few but didn’t really come up with anything extraordinary although there are some new savings options for the young and a new tax on sugary drinks.
Trying to be upbeat, he had to admit that his earlier growth forecasts were not going to be met and therefore were amended to 2 per cent for 2016 down from 2.4 per cent with slightly better but still reduced growth forecasts for the following years. Naturally, the weak world economic was to blame as the UK was affected by slowdowns elsewhere but Mr Osborne was still confident that the UK forecast was stronger than for any other major western economy.
As was to be expected, he also reminded everyone that the Brexit, if it went ahead, could affect his financial forecasts but he didn’t play that card too often or too strongly.
He sees this as a budget for the young and for the future as there will be a tax imposed on sugary drinks by 2018 and a portion of the funds collected (assuming that drink manufacturers don’t change their recipes) will be dedicated to sports facilities for the young.
Keeping with children in particular he has found funds to allow for all schools to become academies by 2022 and there is some suggestion that the school day should increase nationwide by an hour.
For those trying to get onto the property ladder, those under 40 by April 2017 will be able to save money in a ‘Lifetime ISA’ so that if they save up £4,000 per annum, the government will contribute 25 per cent extra to the savings. All of this will be tax free and will be operable until the saver reaches 50.
There will however be conditions on how this money is used. Lifetime Isa account holders will be able to access all the funds, including the government top-up, tax-free to buy a first home costing up to £450,000 or they can remove the funds if they are terminally ill or reach the age of 60. This therefore gives younger people an incentive to either purchase their own property or hold on to the fund for pension use.
The annual Isa limit for regular Isas is to rise from £15,000 to £20,000 which will please many although with such low interest rates, Isas whilst safe are not terribly profitable.
The personal tax allowance is to rise to £11,000 in April 2016 and £11,500 in April 2017 which is worth in the region of £3.50p per week but the higher rate threshold will increase to £43,000 this year and £45,000 next, which did not impress those listening on the opposition bench.
All alcoholic drink duty will continue to be frozen as will fuel tax but cigarettes will increase in price by inflation plus 2 per cent.
There is to be a further increase in insurance premium tax which will hurt motorists and others as it is to be raised by 0.5 per cent to 10 per cent on all insurance except life insurance. This extra levy will be used on flood defences in vulnerable areas.
Inflation is forecast to remain low, spending cuts will continue and more money will be spent on capital projects such as railway infrastructure which will help to see the creation of a further one million jobs by 2020.
Debt targets are going to be missed and borrowing will continue to rise in the foreseeable future.
Overall small business and the self-employed may see some improvements in their financial situation but there is no change in the inheritance tax rules other than certain increases announced in previous budgets.