Live coverage and analysis of the third Budget from Chancellor George Osborne.
15:38 – We have finished writing our 10-page Budget Briefing Note and this is now available to download from here.
13:29 – From April 2013, personal allowance will increase by £1,100, to £9,205 before any income tax is paid. Osborne describes this as the biggest ever increase in the personal allowance, making millions of working people £220 better off each year. Higher earners will also gain from this measure, as long as they earn less than £100,000 a year.
13:20 – Interesting move to introduce cap of 25% of income on income tax relief received each year.
13:19 – Osborne introducing a general anti-avoidance law, to be introduced in the Finance Bill next year. Stamping out stamp duty avoidance has already been heavily trailed. Osborne is increasing stamp duty applied to residential properties over £2m purchased within corporations to 15%. This comes into force today. New stamp duty rate of 7% on properties purchased for over £2m.
13:15 – High oil prices placing pressure on household expenditure. Above inflation rises to fuel duty will only return if oil price falls substantially, as a result of the fair fuel stabiliser. Increasing vehicle excise duty by inflation only and frozen for road hauliers.
13:13 – No further changes to duty rates on alcohol. Duty on all tobacco products to rise by 5% above inflation, 37p on a pack of cigarettes from 6pm tonight.
13:10 – Further cut of 1% to the main corporation tax, to 24%, being introduced in April 2012. Additional cuts also being retained, taking it down to 22% in 2014 and making the UK a very competitive place to do business. Osborne describes this as an advertisement for investment and jobs in Britain.
13:07 – New single tier state pension being introduced at £140 a week, more details coming within a few months.
13:04 – Osborne has moved onto the simplification of taxes now. Small firms with a turnover of up to £77,000 will see simpler tax return system, on the basis of cash received rather than more complex accounting principles. Some anomalies in VAT system also being resolved. Simplification of age-related allowances will have an impact on a lot of our clients, hopefully removing many of them from the self-assessment system. It sounds like the age-related personal allowance is being phased out, with a single personal allowance being introduced for all.
12:53 – Plenty of macro economic commentary so far and a couple of pre-announced measures, including private investment in the road network and considering the issue of 100 year or even perpetual gilts.
12:37 – After setting the scene for some bad figures, Osborne announcing a surprise slight improvement in the Office for Budget Responsibility (OBR) forecasts. The OBR now forecasts 0.8% growth this year, 2% in 2013, 2.7% in 2014, 3% in 2015 and 3% in 2016. Unemployment forecasts remain stable and claimant count forecast is slightly improved. This could provide some room for maneuver in the Budget.
12:33 – The Budget gets underway with the Chancellor promising a Budget that rewards work. It’s also about repairing debts. According to Osborne, Britain is going to earn its way in the world. He is promising a tax system that is more competitive for business than any other major economy in the world and that will lift the lowest paid out of tax altogether.
12:14 – We are watching Prime Minister’s Questions, ready for the Budget to get underway in a little over ten minutes time.
10:28 – The latest minutes from the Monetary Policy Committee have just been published by the Bank of England. They show that all nine members voted unanimously to keep interest rates on hold at the record low of 0.5%. Two of the nine members wanted to increase the programme of quantitative easing by a further £25bn to £350bn, rather than leave it on hold at £325bn. Once we have read the minutes in full, we will post more detail on the current thinking from the Bank of England in a separate blog.
10:23 – Talking to my colleagues here at Informed Choice this morning, our biggest fear is that the Chancellor will tinker with the pension system (again) in his Budget speech this afternoon. We worry that constant changes to allowances and rules will reduce confidence in retirement planning using pensions. Whilst the speculation surrounding pension tax relief and tax-free cash from pensions has reduced in recent days, we do expect to see some announcements this afternoon, possibly reducing the annual allowance from £50,000 to £35,000.
10:02 – Economists think that public borrowing over the past twelve months could be between £3bn and £10bn lower than originally forecast. If correct, this could give the Chancellor some room for additional tax cuts this afternoon to help stimulate further economic growth. However, it is also thought that Treasury receipts in February were very disappointing.
09:39 – One of the items we expect to see in the Budget this afternoon is a temporary relaxation of Sunday Trading legislation, so larger stores can open for longer on Sundays during the period of the Olympic Games. Whilst retailers and tourism chiefs will be happy with this move, it is likely to upset some of those working in the retail sector and certain religious groups. Could this move be a prelude to a complete removal of restrictions on Sunday trading.
07:55 – An interesting debate on BBC Radio 4 right now – would you plan your income in the knowledge that the 50p tax rate was going to be reduced shortly, holding back some income in this tax year so you paid less tax on it next year?
07:42 – The Times is reporting that George Osborne will reveal a new 7% rate of stamp duty on houses worth over £2m. This could help fund the cost of cutting income tax for lower and higher earners, with apparent plans to increase the income tax personal allowance in 2013 and cut the 50p top rate of income tax this year.
Photo credit: Flickr/The Prime Minister’s Office
