Idox Policyfinder Team

Presented to Parliament by Chancellor of the Exchequer George Osborne, Budget 2014 sets out the next steps in the Government’s long-term economic plan. The Government believes this Budget not only sets out further action to secure the recovery and build a resilient economy, but also the most radical reforms to saving for a generation, providing security for families to plan for their future. 

The Office for Budget Responsibility (OBR) is forecasting growth this year of 2.7%, up from 2.4% in the Autumn Statement, with growth of 2.3% next year, 2.6% in 2016 and 2017, and 2.5% in 2018. The OBR also forecasts that the deficit will be 6.6% of GDP this year, 5.5% in 2014-15, then falling to 0.8% by 2017-18 with a surplus of 0.2% in 2018-19.

Key measures announced include the following:

• The £1 billion departmental underspend for 2015-16 set out in the Autumn Statement is to become permanent.
• Pay awards for most public sector workers will be limited to 1% in 2014-15, and that the intention is to limit awards to 1% in 2015-16.
• The cap on welfare spending is to be set at £119 billion in 2015-16, rising to £127 billion in 2018-19.
• The planned rise in fuel duty from September 2014 has been scrapped.
• For the second year running, beer duty is to be cut by 1%. The alcohol duty escalator will be scrapped and duty will instead rise with inflation.
• The tobacco duty escalator is to be extended into the next parliament, with tobacco duty rising by 2% above inflation.
• The basic rate tax allowance will rise to £10,500 next year, equating to £805 less in tax for the typical taxpayer, and taking over 3.2 million low earners out of income tax completely.
• The higher rate income tax threshold is to rise to £41,865 from April 2015, and then up 1% again next year to £42,285.
• Scrapping of the 10% tax rate on savings.
• Tax restrictions on how pensioners have access to their pension pots will be lifted, ending the requirement to buy an annuity.
• Cash and stocks ISAs will be merged to create a single New ISA (NISA), with the annual limit increased to £15,000. The limit for Junior ISAs is to increase to £4,000.
• £150 million will be made available to help self-build homes, and the Help to Buy equity loan scheme will be extended to 2020.
• Grants will be available for 100,000 more apprenticeships, and graduate-level apprenticeships will be developed.
• The annual investment allowance for business will be doubled to £500,000 and extended to 2015, meaning 99.8% of businesses will pay no tax on investment.
• Young workers are to be taken out of employee National Insurance.
• Legislation will be introduced to give the Welsh Government tax and borrowing powers to fund infrastructure needs, including improvements to the M4 motorway.
• The introduction of a new, 12 sided £1 coin in 2017 to combat counterfeiters.

The Chancellor said:

“This is a Budget for building a resilient economy.

“If you’re a maker, a doer or a saver: this Budget is for you.”

This summary was originally posted by Idox’s POLICYfinder team. To find out more about POLICYfinder click here.