Welcome to the 2016 Budget Newsletter from Reynolds and Co
Chancellor George Osborne delivered his eighth Budget to the House of Commons, dubbing it a 'Budget for the long term' but warning that 'the storm clouds are gathering again'.
Having proclaimed that the British economy is 'fit for the future' and that the Government remains on course to achieve a budget surplus of £10.4bn in 2019/20, the Chancellor warned that growing global economic gloom threatens the UK.
With low productivity growth and a weak global outlook continuing to present a 'dangerous cocktail of risks', the Chancellor revealed that the Office for Budget Responsibility (OBR) has significantly revised down its economic forecasts for the next five years, with UK economic growth forecast to be just 2% in 2016.
Official figures also revealed that the Chancellor has missed his target to reduce debt as a share of GDP. Borrowing forecasts have been revised upwards to £55.5bn for 2016/17, and the Chancellor announced the need for deeper spending cuts, with £3.5bn of additional savings to be made by 2019/20.
With an EU referendum fast approaching, the Chancellor was keen to point out that the OBR's forecasts were predicated on there being no Brexit, and claimed that leaving the EU could usher in a 'period of uncertainty' for the UK.
The Chancellor revealed a package of business tax measures, announcing that in England the Small Business Rate Relief threshold will rise from £6,000 to £12,000 from April 2017 and promising further radical changes, with the uprating of business rates set to change from RPI to CPI. Greater London will see the complete devolution of business rates from next April.
Meanwhile, for individuals, building on the recent announcement of a new Help to Save scheme, the Chancellor unveiled a new Lifetime ISA, which is intended to allow adults aged under 40 the opportunity to save up to £4,000 a year towards buying their first home (up to a limit of £450,000) or to save towards their retirement, and which the Government will top up by 25%.
Other key announcements on personal taxation included the next step in the Government's drive to increase the income tax personal allowance, which will rise to £11,500 from April 2017, at which time the threshold for higher rate tax will also rise to £45,000.
Capital gains tax rates will also be cut, with the headline rate falling from 28% to 20% and the basic rate from 18% to 10% with effect from 6 April 2016.
Fuel duty will remain frozen for the sixth consecutive year, while tobacco duties will rise above inflation, and from 2018 a new sugar levy on the soft drinks industry will aim to combat the problem of childhood obesity.
Other significant announcements include additional investment in the nation's infrastructure, further measures towards the 'devolution revolution' and plans to turn every school in England into an academy.
For a detailed overview of the Budget Report and what the measures mean for you and your business, visit our Budget Report summary.
WHAT THEY SAID
'This is a Budget that gets investors investing, savers saving, businesses doing business, so that we build for working people a low tax, enterprise Britain; secure at home, strong in the world.'
Chancellor George Osborne
'It's a recovery built on sand and a Budget of failure. Low paid jobs do not bring in the tax revenues that the Chancellor needs to balance the books.'
Jeremy Corbyn, Labour leader
'His sugar tax may seem sweet, but his hidden cuts are sour.'
Susan Kramer, Liberal Democrats
'Businesses will welcome the Chancellor's permanent reforms to business rates - taking more small firms out of the regime and changing the uprating mechanism from RPI to CPI, which the CBI has long been calling for.'
Carolyn Fairbairn, Confederation of British Industry
'The combined measures announced on business rates - the single biggest tax cut in today's Budget - will be viewed by our members as a welcome and important step on the road to fundamental reform.'
Mike Cherry, Federation of Small Businesses
'Far from increasing growth, he's had to downgrade his forecasts and accept that his plan is failing on productivity and pay. A fair Budget for the next generation would have delivered far more investments in infrastructure, jobs and homes and fewer eye-catching gimmicks.'
Frances O'Grady, Trades Union Congress
For the full Budget announcement visit:
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In the News
- 2016 Budget: UK growth revised down
- The Office for Budget Responsibility (OBR) has published its latest fiscal outlook, outlining its forecasts for the UK economy.
- 2016 Budget: The political reaction
- Labour leader Jeremy Corbyn has responded to the changes made in the Chancellor's Budget speech, commenting that the Budget 'has unfairness at its core'.
- 2016 Budget: The business reaction
- Business groups have given their responses to the measures announced within Chancellor George Osborne's 2016 Budget speech.