New Budget 2016

Chancellor George Osborn has unveiled new Budget. He revised down the UK’s growth forecast in his eight Budget and sparked controversy by warning of the risks to the UK economy of EU exit. 

Mr Osborne announced £3.5 bn in extra spending cuts by 2020 to help meet his financial targets, which he was forced to admit had slipped in the four months since his Autumn statement, due to sluggish growth.

He said the £350m raised by a tax on the makers of sugary drinks would be spent on doubling the funding of primary school sports. The levy will be introduced in two years’ time, to give companies time to adapt products to reduce their sugar content.

Other key Budget announcements include:

• Mr Osborne confirmed that he has failed to meet the rule of debt falling as a proportion of GDP this year
• The rate at which workers start paying the top rate tax is to be raised from £42,385 to £45,000 from April next year
• The tax-free personal allowance is being raised to £11,500 next year
• Corporation tax to be cut to 17% by April 2020
• The UK is still on course to clear its deficit by 2019/20, the chancellor claimed
• On savings, the ISA limit will be increased to £20,000 a year for all saver
• An extra £700m for flood defences - to be paid with a 0.5 percentage point increase on the tax on insurance premiums
• 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%, but residential property will still be taxed at current rates
• Reforms to business rates will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017
• New action to tackle overseas retailers who store goods in Britain and sell them online without paying VAT
• New tax free allowances for “micro entrepreneurs” who rent their homes or sell services through the internet

On the investment side, Mr Osborne committed £300m for transport projects, with the government funding the start of work on the Crossrail 2 rail line and new High Speed 3 link across the north of England.

Mr Osborne’s package includes a 1.5bn plan to turn all state schools into academies by 2020 meaning they are independent of local authority control.

He froze fuel duty but announced a 2% increase in tax on cigarettes, with 3% on rolling tobacco, from 6 pm. Beer and cider duty will be frozen as will the levy on whisky and other spirits.