A Budget Overview

Over the next 4 years, the deficit will have been eliminated and the government will be running a surplus – where more tax is raised than is spent. To help achieve this, there will be a further £3.5 billion of savings from departmental spending in 2019-20, less than 50p in every £100 the government spends. George Osborne proclaimed:

“I report on a deficit down by two thirds, falling each year and – I can confirm today – on course for a budget surplus. The British economy is stronger because we confronted our country’s problems and took the difficult decisions.

The British economy is growing because we didn’t seek short term fixes but pursued a long term economic plan. The British economy is resilient because whatever the challenge, however strong the headwinds, we have held to the course we set out.”

Here is a run-down of all the big announcements from Wednesday’s budget.

Education

Double the dedicated funding for sport in primary schools, paid for by a levy on soft drinks

Soft drinks companies will pay a levy on drinks with added sugar from April 2018. This will apply to drinks with total sugar content above 5 grams per 100 millilitres, with a higher rate for more than 8 grams per 100 millilitres. This won’t need to be paid on milk-based drinks or fruit juices.

This will be used to double the primary PE and sport premium (the additional money schools have to spend on PE and sports) to £320 million a year.

A longer school day for 25% of secondary schools

25% of secondary schools will be able to opt in to a longer school day from September 2017 so that they can offer a wider range of activities for pupils. There will be up to £285 million a year to pay for this.

Every school will be an academy by 2022

The current system for funding schools will also be replaced by a fairer national funding formula from April 2017. There will be £20 million a year in additional money for schools in the north of England.

Saving

Lifetime ISA: a new £4,000 ISA that you can use to save for retirement or to buy your first home

 

The total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017.

The point at which you pay the higher rate of Income Tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.

Transport

HS3 between Leeds and Manchester

£80 million to give Crossrail 2 the go-ahead

£100 million to help people move on from emergency hostels and refuges

Tax Cuts & Avoidance

 

New tax allowances for money earned from the sharing economy

From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.

Freezing beer duty to help pubs

Fuel duty will be frozen again in 2016-17

Making sure large companies can’t artificially shift profits out of the UK

Over the next 5 years, the government will raise nearly £8 billion from large companies and multinationals through changes to the rules on interest and other measures, including:

• introducing rules to prevent multinational companies avoid paying tax in any of the countries they do business in, a technique called hybrid mismatches
• taxing outbound royalty payments better – these are fees for using intellectual property like patents and copyrights – meaning multinationals pay more tax in the UK
• making sure offshore property developers are taxed on their UK profits

Tax support worth £1 billion for the oil and gas industry

Corporation Tax will be cut again to 17% in 2020

Business

Cutting business rates for all rate payers

From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.

Currently, this 100% relief is available if you’re a business that occupies a property (e.g. a shop or office) with a value of £6,000 or less.

There will be a tapered rate of relief on properties worth up to £15,000. This means that 600,000 businesses will pay no rates.

Capital Gains Tax rates will be cut from 6 April 2016, but residential property will still be taxed at current rates

From April 2016, the higher rate of Capital Gains Tax will be cut from 28% to 20% and the basic rate from 18% to 10%.

Employers will pay National Insurance on pay-offs above £30,000 from April 2018

Other

Class 2 National Insurance contributions (NICs) for self-employed people will be scrapped from April 2018

Currently, self-employed people have to pay Class 2 NICs at £2.80 per week if they make a profit of £5,965 or over per year. They also pay Class 4 NICs if their profits are over £8,060 per year.

From April 2018, they will only need to pay one type of National Insurance on their profits, Class 4 NICs.

Paying Class 2 NICs currently enables self-employed people to build entitlement to the State Pension and other contributory benefits.

After April 2018, Class 4 NICs will also be reformed so self-employed people can continue to build benefit entitlement.

New stamp duty rates for commercial property from 17 March 2016

The way stamp duty on freehold commercial property and leasehold premium transactions is calculated will change. Currently, these rates apply to the whole transaction value. From 17 March 2016 the rates will apply to the value of the property over each tax band.

The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000; 2% between £150,001 and £250,000, and 5% above £250,000.

Buyers of commercial property worth up to £1.05 million will pay less in stamp duty.

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.

More funding to protect homes and businesses from flooding