Credit: Andrew Parsons

Budget 2015: What's in George Osborne's red box?

The chancellor was treading the line between balancing the books and sweet-talking voters today.

by Jack Torrance
Last Updated: 15 Mar 2016

George Osborne delivered what may be his last Budget as chancellor of the exchequer today. He had insisted beforehand there would be 'no giveaways, no gimmicks', but just 50 days from what looks to be the closest election in decades, there were a few small sweeteners to butter up swing voters - although he didn't pull any rabbits out of the red briefcase as many had expected.

But as usual most of the measures he announced had been leaked. Retailers will be pleased to hear about a 'radical review' of business rates – though quite how radical is unclear. Pensions firms will be less happy, as Osborne announced previously trailed plans to allow those who have already purchased annuities to cash them in without big tax charges.

Osborne's also said he would be introducing the so-called 'Google tax' on multinationals that shift their profits offshore in April, although he didn't spell out the all-important details. He also announced much lobbied-for measures to help the North Sea oil industry, which has been hammered by falling crude prices.

There was also changes to personal taxes. The coalition has been upping the income tax allowance throughout this parliament and Osborne announced it would go up to £10,800 this year and £11,000 next; a boost for low earners as well as the middle classes. With an eye on his core vote he also announced above-inflation rises in the threshold for higher rate payers, and increased the inheritance tax threshold on property to £1m.

Osborne also abandoned plans to run a budget surplus of £23bn by 2020, in favour of a £7bn target. That won't do much to cut the national debt, but could at least help tackle Labour claims that he want to take spending levels back to the 1930s.

Of course, much of this is just grandstanding. Nobody knows what the Government front bench will look like in two months time and whoever wins the election will likely have to thrash out a deal with a junior coalition partner.

Here are the policies in more detail:

Osborne has said he will double funding available for the export agency UKTI to help more firms trade with China. The trade deficit has shrunk despite faltering growth in the Eurozone and emerging markets, he said.

The national minimum wage will rise to £6.70 this year, he confirmed, and is set to reach £8 by 2020.

He also announced plans to sell £13bn of mortgage assets left over from the nationalisation of Northern Rock and Bradford & Bingley, and another sell-off of £9bn of Lloyds shares - which will be used to pay off some of the national debt. No mention of RBS though...

Osborne's 'Google tax' on diverted profits will be legislated on next week and will come into effect at the start of April.

As well as increasing the rate of the bank levy to 0.21%, Osborne said he will stop banks using the fines they've paid for misselling to reduce their corporation tax liabilities.

The north sea oil industry will benefit from a cut in the petroleum revenue tax from 50% to 35% and the supplementary charge will be cut to 20% - the 10% cut industry elder Sir Ian Wood was hoping for

Class 2 national insurance contributions for the self-employed will be abolished entirely along with annual paper tax returns.

Pubs and brewers will benefit from a 1p per pint cut in beer duty - not vast but every little helps. Cider duty will also be cut by 2%.

The personal tax-free allowance will rise to £10,800 next year and £11,000 in the year after. The higher rate tax threshold will also increase above inflation.

Pensioners will be able to access their annuity, the tax charge of 55% will be abolished.

ISAs will be made more flexible so people can take money out and put it back in without losing their tax breaks. From April next year, the first £1,000 you earn in savings interest will be completely tax free.

First-time buyers who save for a house will have their deposit topped up by the Government (dubbed a 'House to Buysa by some commentators). But Osborne didn't announce any measures to increase the housing supply, so the housing shortage is unlikely to be remedied anytime soon. 

Osborne reaffirmed his commitment to creating a 'northern powerhouse', announcing that Manchester will be able to keep more of the taxes it raises. In the midlands, £60m will be invested in a new 'energy research accelerator'. The automotive industry will benefit from £100m for driverless cars – useful but not much compared to the kind of cash Google is putting into it.

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