Budget 2014: key points from George Osborne's statement
Beer duty down, tobacco duty up, while savers and pensioners given a helping hand from Treasury
PENSIONERS and savers appeared to come out on top as George Osborne delivered his Budget to the House of Commons this afternoon. The Chancellor warned that the nation still does not "invest enough, export enough or save enough" and announced a range of measures for a "resilient economy". Beer duty was cut, tobacco duty hiked and fuel duty was frozen, while tax-free cash Isa limits were increased. Here is a summary of the key points:
- Duty on beer cut by one penny a pint for the second year running. Duty on cider and spirits frozen, and the above-inflation duty escalator for wine abolished.
- The maximum tax-free childcare support increased to £2,000 per year for each child.
- Bingo tax cut from 20 per cent to 10 per cent, but duty on fixed-odds betting terminals raised to 25 per cent.
- Government to invest £140m of new funding to repair damaged flood defences.
- Fuel duty rise planned for September cancelled. Osborne claims this will make petrol 20p lower per litre than it would have been.
- Tobacco duty to rise by two per cent above inflation, making a packet of 20 cigarettes around 28p more expensive.
- Britain's GDP forecast to grow by 2.7 per cent this year and 2.3 per cent next year, then by 2.6 per cent in 2016 and 2017 and by 2.5 per cent in 2018.
- Deficit forecast to be 6.6 per cent of GDP this year and 5.5 per cent in 2014/15. It is then expected to fall to 0.8 per cent by 2017/18, with a surplus of 0.2 per cent in 2018/19.
- Borrowing forecast to be £108bn this year and £95bn next year, leading to a surplus of almost £5bn in 2018/19.
- Around 1.5 million more jobs expected over the next five years, while unemployment set to fall to just over five per cent. Earnings to start growing faster than inflation this year and the national minimum wage for adults will increase by three per cent in October.
- Tax-free personal allowance to increase from £10,000 to £10,500 in April 2015. This means more than 3.2 million low earners will no longer pay income tax.
- Higher rate income tax threshold to rise from £41,450 to £41,865 next month, and then to £42,285 next year.
- Tax increase for homes owned through companies. The threshold extends from residential properties worth more than £2m to those worth more than £500,000.
- Inheritance tax waived for emergency service workers who give their lives in the line of duty.
- All long-haul flights to carry the lower rate of air duty currently charged on flights to US, while air ambulance fuel duty waived.
Pensions and savings
- From 1 July 2014, savers will be able to put a total of £15,000 a year in cash and/or shares into a tax-free New Isa, which replace the old Isa scheme.
- From June, savers can buy up to £40,000 in Premium Bonds, with double the number of £1m jackpots available.
- Greater flexibility for pensioners, giving people more freedom to choose whether they access their defined contribution pension savings as a lump sum, draw them down over time or buy an annuity.
- A new Pensioner Bond, paying market-leading rates, to be available from January to all people over 65, with interest rates of 2.8 per cent for one-year bonds and 4 per cent for three-year bonds.
- Welfare budget to be capped at £119bn for 2015/16 and will rise in line with forecast inflation to £127bn in 2018/19.
- Annual investment allowance to be doubled from £250,000 to £500,000 until the end of 2015.
- UK export finance to double its lending scheme to £3bn and cut lending rates by a third to help British businesses reach fast-growing emerging markets, such as Africa, India and China.
- Energy costs to be reduced in a bid to ensure the UK remains a competitive location for manufacturing.
- Plans to build the new garden city in Ebbsfleet to go ahead, with government hinting that more garden cities will follow.
- Help to Buy scheme extended to 2020. It is expected to help another 120,000 families to buy a new-build home by 2020.