Here are the key points followed by things you should know in the small print:
George Osborne unveiled a tax on sugary drinks in a wide ranging Budget dominated by gloomier growth forecasts.
- Growth forecast cut for the next five years and £3.5bn in extra public spending cuts by 2020
- Mr Osborne has missed his target of cutting debt as a share of GDP
- A 2% increase in tax on cigarettes and 3% on rolling tobacco, but beer and cider duty will be frozen as will the levy on whisky and other spirits
- Plans for a longer school day in England
- The rate at which workers start paying the top rate tax is to be raised from £42,385 to £45,000, with the tax-free personal allowance raised to £11,500 and corporation tax to be cut to 17% by April 2020
- On savings, the ISA limit will be increased to £20,000 a year for all savers, and lifetime ISAs with a 25% bonus will be introduced for young people
- An extra £700m for flood defences – to be paid with a 0.5 percentage point increase on the tax on insurance premiums
- The higher rate of Capital Gains Tax is being cut from 28% to 20%
The £530m raised by a tax on the sugar content of soft drinks – the equivalent of about 18-24p per litre, the government says – will be spent on primary school sports in England, with the devolved administrations in Scotland, Wales and Northern Ireland free to decide how to spend their share.
Mr Osborne’s sugar tax announcement sparked a big fall in the share price of soft drinks makers.
THE SMALL PRINT
Young savers have welcomed Osborne’s plans to introduce a Lifetime ISA from April 2017 , allowing those under 40 to put£4,000 away – with the Government topping up savings by £1 for every £4 saved up to the age of 50.
But while funds can be used to buy a first home – up to £450,000 – any time after opening the account, and can be withdrawn from age 60 to fund retirement, this announcement comes with a sting in the tail.
If savings are accessed before the age of 60 – other than to buy a home – the bonus will have to be returned and a 5% charge will be levied. The only other exception is if you are terminally ill.
With this in mind, experts say you are still better off in a pension – based on the contribution you make, the employer contribution you get, along with the Government tax relief.
Help to buy ISA
The Chancellor also never mentioned that the Government’s popular Help to Buy ISA is set to be scrapped in 2019.
Despite it only being a year since the Help to Buy ISA was introduced to help first-time buyers to get on the housing ladder, it is set to be scrapped in 2019. The Lifetime ISA is set to supersede it, and, perhaps in an effort to simplify and streamline what is available, the Government has sacrificed the earlier product for the latest one.
The money advice service is to be abolished
Under proposals now under consultation, the MAS will be closed with its pension guidance remit going to a new provider. There are also plans to launch a second body with a focus on providing “frontline” services to those in financial difficulty.
These changes have prompted concerns that people won’t know where to turn for guidance and advice.
Pensions dashboard to be introduced
One of the better pre-announced measures that was not included in the Budget speech, but detailed in the documents, is the fact the Government has also made a firm commitment to a pensions dashboard.
This would enable people to see information on all of their pensions in a single place, using digital technology.