In case you missed it, today was Budget day. The last of this Parliament and, therefore, possibly of George Osborne’s career, but what happened and what does it mean?
In a nut shell, this budget has:
- Cut beer duty by 1p a pint and cider by 2p a pint. Great news for consumers of those beverages, except you’d have to be an alcoholic to be drinking enough to notice the difference that tax cut makes to your bank balance.
- Frozen petrol duty. Marvellous, but let’s face it, the surge in Saudi production at the end of last year did far more for oil prices than this budget has, and let’s not forget, more than 50 per cent of pump prices are tax anyway.
- Not changed tobacco or gambling taxes, but tobacco duties are already set to rise by 2 per cent above inflation which is 16p on a pack of 20.
- Increased the personal allowance (the amount you earn before paying income tax) from £10,600 to £10,800 in 2015-2016, and then to £11,000 in 2017-2018. Given the predicted rate of inflation is expected to fall to 0.2 per cent in 2015, this is a real increase in the tax free allowance, equating to a tax cut. The same goes for the change in the 40p tax bracket, increased from £42,385 in 2014-5 to £43,300 in 2017-8.
- Created a new personal savings allowance meaning the first £1,000 interest in savings income will be tax free for basic rate tax payers (£500 allowance for 40p ratepayers). With an increase in the annuals ISA savings limit, this has been purported to be a budget for the saver. However, given that the sector of voters most severely hit by the current low interest rates are the pensioners reliant on saving income, it’s really a bit of a ploy to win their votes.
- £75m from Libor fines to go to armed forces charities and an extra £25m for army veterans. Great news, although armed forces veterans relying on charities is a bit of national disgrace really, particularly if they are only getting funding as a result of foul play by the banks.
- Introduced a business tax on diverted profits (profits moved offshore to avoid UK tax) that will come into effect next month, which should stop some of the Starbucksesque ‘sharp’ practise on tax payments in the future.
- Increased the annual bank levy to 0.21 per cent which raises an extra £900m. Sorry how much did that bail out cost again?
- Cut the North Sea Oil producers supplementary charge from 30 per cent to 20 per cent and there’s to be a new tax allowance to encourage investment in the North Sea. But while the North Sea provides thousands of jobs, our production costs are huge compared to other producers. Isn’t it about time we started looking at encouraging investment in other types of energy production, like the Swansea Bay Tidal Lagoon proposal, and being a world leader there?
- Mental health services to get an extra £1.25bn in extra funding, it’s about time.
But what does this all really mean? Well as always, following the revelation that breast fed babies grow up to be more intelligent adults, Twitter has provided the searing, thought provoking, economic and political analysis we’re all after.
— Hughesie (@bridgejon1) March 18, 2015
What did you think of the Budget? Have your say in the comments section below.