In his “one nation” Budget the Chancellor George Osborne delighted the Work and Pensions Secretary Iain Duncan Smith, with the introduction of a compulsory National Living Wage of £7.20.
The compulsory minimum wage will be paid to all over 25s from next April. It is set to rise to £9 an hour by 2020 in line with 60% of median earnings and by the end of parliament.
Wales Online reports:
Working-age benefits will be frozen for four years – including tax credits and local housing allowance, but excluding maternity pay and disability benefits.
The rate of Employment and Support Allowance paid to those deemed able to work to be aligned with Jobseekers’ Allowance for new claimants.
The automatic entitlement to housing benefit for 18 to 21 year olds will be abolished; they will have a new Youth Obligation requiring them to earn or learn. Exemptions are promised for vulnerable people.
However, disability benefits will not be taxed or means-tested, and funding for domestic abuse victims and women’s refuges will be increased.
Britain is now committed to meeting the Nato target of spending 2% of GDP on defence for rest of this decade, while the Ministry of Defence is guaranteed real-terms increases in its annual budget.
Corporation tax will be cut from 20% to 19% in 2017 and 18% by 2020. The dividend tax credit will be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax will be set at 7.5%, 32.5% and 38.1%.
The Annual Investment Allowance for small and medium-sized businesses will be set at £200,000 from this year but the Climate Change Levy exemption for renewable electricity to be removed.
Pensions tax annual allowance will be tapered away to a minimum of £10,000 from next year.
A new inheritance tax allowance of £175,000 on homes left to children or grandchildren will be available from 2017, allowing £1m to be passed on tax-free. The reforms are intended to ensure that those who downsize do not lose any of the allowance.
Tax relief for homeowners who rent out a room will be increased from £4,250 to £7,500 from next year.
Mortgage interest relief on residential property will be restricted to the basic rate of income tax, phased in over four years from April 2017.
Fuel duty and car tax
Fuel duty will remain frozen this year but new bands for vehicle excise duty for brand new cars will come in from 2017, with most cars paying a £140 standard charge. There will be no change to VED for existing cars.
The bank levy rate will be gradually reduced over the next six years, while a new 8% surcharge on bank profits will be introduced from January 2016.
Non-dom status will be abolished for people born in the UK to parents domiciled here.
Permanent non-dom tax status will be abolished with anyone resident in the UK for more than 15 years of the past 20 years required to pay full UK tax from April 2017, raising £1.5bn.
HM Revenue and Customs will receive an extra £750m to go after tax fraud and evasion, with the aim of raising £7.2bn in extra tax.
Public sector pay
Increases in public sector pay will be restricted to 1% per year for the next four years.
The fiscal plan requires £37bn of further consolidation over five years, including £12bn from welfare.
Tackling the deficit
After 2019-20, deficit will be allowed only when the Office for Budget Responsibility judges real GDP growth is lower than 1% a year.
The deficit is forecast to fall to 3.7% of national income this year, then 2.2% in 2016-17 1.2% in 2017-18 and 0.3% in 2018-19, before moving into surplus of 0.4% in
2019-20 and 0.5% in 2020-21.
National debt is forecast to be 80.3% this year, then 79.1%, 77.2%, 74.7% and 71.5% in subsequent years before reaching 68.5% in 2020/21.
Running a surplus
A surplus of £10bn is forecast in 2019-20 (a year later than planned) and £11.6bn in 2020-21.
Tuition fees and apprenticeships
The university tuition fee cap will be linked to inflation for institutions offering high-quality teaching. A new apprenticeship levy will apply to all large firms.
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