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The UK inflation rate stayed at 0.3% in February, the same as January.

The Office for National Statistics (ONS) said that the rising food prices, in particular vegetables, helped to keep the Consumer Prices Index unchanged.

Last year inflation reached zero and the annual inflation has continued to be below the Bank of England’s 2% target for the past two years. The Bank expected inflation to stay below 1% this year.

Under the separate Retail Prices Index (RPI) measure, inflation was 1.3% in February, which also showed no change from the previous month. The measure includes housing costs.

The ONS reported that government borrowing fell less than expected in February at £7.1 billion. Chancellor George Osborne is close to missing his target for cutting the budget deficit in the 2015-16 financial year. The total deficit now stands at £70.7 billion for the 11 months of the year. The chancellor’s full-year target is £72.2 billion.

Chancellor George Osborne announced that corporation tax will be reduced by 17% by April 2020 and hopes this will lure more companies to Britain.

The tax was already cut from 28% to 20% previously and Osborne believes the extra cuts will provide a boost to local firms. This should save British firms around £15 billion a year by 2020.

A reduction in corporation tax would make Britain the country with the lowest rate in the G20, which will encourage more people to start, run and grow businesses in the UK.

The deficit will also be eliminated over the next 4 years and the government will be running a surplus. There will be a further £3.5 billion of savings from departmental spending in 2019-2020 to help achieve this.

Osborne announced in the Budget that there will be a longer school day for 25% of secondary schools and every school will become an academy by 2022.

The new Lifetime ISA will allow people to save for retirement or to buy a first home as from April 2017, any adult under 40 will be able to open one. Each year up to £4,000 can be saved and savers will receive a 25% bonus from the government.

The current Personal Allowance rate stands at £10,600 before workers start paying tax, but this will change from £11,000 in 2016 to £11,500 in April 2017.

 

 

George Osborne has unveiled a tax on sugary drinks in the 2016 budget.  The tax will be levied in two bands one for total sugar content above 5g per 100 millilitres and a second higher band for most sugary drinks with more that 8g per 100 millilitres.

The government has said that the sugar tax will be introduced in 2018 giving companies enough time to modify their product mix and promote low sugar items.Fizzy Drink

George Osborne said “I can announce that we will introduce a new sugar levy on the soft drinks industry.  We all know one of the biggest contributors to childhood obesity is sugary drinks” he said “ I am not prepared to look back at my time here in this parliament, doing this job and say to my children’s generation, I’m sorry.  We knew there was a problem with sugary drinks.  We knew it caused disease but we ducked the difficult decisions.”

The government has said that the sugar tax will be introduced in 2018 giving companies enough time to modify their product mix and promote low sugar items.

The move has been hailed by campaigners as a significant step to the fight against child obesity

The Chancellor said that the estimated £520 million a year raised from the sugar tax will be spent on double funding for sport in primary schools.

 

On Wednesday 16th March Chancellor George Osborne will deliver the Budget plans to members of Parliament in the House of Commons.

Although the Autumn Statement happened back in November 2015, it was another update on the Chancellor’s economic forecasts. The Budget this week will contain more detail and will happen at 12:30pm and last approximately an hour.

Pension changes were not covered in the Autumn Statement, so some expect changes to this in the Budget on Wednesday. Some have said Osborne may reduce the amount that people can save into their pension.

Although nobody knows what George Osborne will deliver in the Budget, many think that it could be possible for him to introduce a new flat rate on tax relief on contributions of between 25% and 33%.

The Chancellor has admitted that he may have to impose further austerity measures. This could mean more reductions in the budgets of non-protected government departments. He also warned that more savings will be needed due to the worsening of the economic backdrop.chancellor

The Government has hinted that millions of people may soon have to work until they are well into their mid-70’s before even qualifying for their state pensions, as details of a review into the State Pension age were published.

Happy couple on the beach of sea

The new report looks set to forecast a gloomy future for many workers who will have to continue to work on long past the currant retirement age to enjoy the benefits previous generations were able to access.

The current state pension age is 65 for men and 60 for women and is due to rise for both to 66 by 2020.  It is due to increase to 67 between 2026 and 2028.

The government said the review, required under existing legislation, would consider changes in life expectancy as well as wider changes in society and “make sure that the state pension is sustainable and affordable for future generations” It said it would also consider whether “the current system of a universal state pension age” rising in line with life expectancy was “optimal in the long run”.  This suggests the review will look at whether the retirement age should rise even if life expectancy slows

The review is due to report in time for any changes to be considered by George Osborne by May 2017.

In the Autumn statement last year, George Osborne believed it was his priority to rebuild Britain.  He conceded that world growth forecasts had been revised, in part because of ongoing problems in the Eurozone. In the UK, the economy is expected to grow a little faster than originally predicted over the next two years, before slowing down somewhat towards the end of the decade.

Higher than expected tax revenues and lower interest payments on government debt handed the Chancellor more flexibility than many analysts expected.

Business, enterprise and employment in 2016/17

In a boost for SMEs, the Chancellor confirmed that the small business rate relief scheme would be extended for another year. Around 600,000 firms are expected to benefit as a result.

The apprenticeship levy is expected to raise £3billion a year. This will be set at 0.5 per cent of the payroll bill, although the Chancellor has claimed that only two per cent of employers will be eligible to pay.

Pushing ahead with his plans to devolve greater spending powers to local authorities, Mr Osborne said that 26 new or extended enterprise zones were being created around the country.

The Government will be doing away with uniform business rates and devolving power to set the rates to local councils. The local authorities will soon also be able to keep this revenue, rather than having to hand over money for ministers to reallocate.

The continuing economic recovery is expected to facilitate the creation of “more than a million” extra jobs during the next five years.

There is, however, likely to be concern that the Department for Business budget is to be slashed by 17 per cent.

Tax

A new, increased rate of stamp duty land tax is to be introduced for buy-to-let and second homes. This will be three per cent higher than the normal rate and takes effect from April 2016. The Chancellor said this will raise £1 billion by 2021, although there are concerns it will have a significant impact on the buy-to-let sector. There will also be a consultation on accelerating the stamp duty land tax on transactions from 30 days to 14.

From 2019, Mr Osborne announced that Capital Gains Tax (CGT) will need to be paid within 30 days of selling a residential property.

It was proposed that the rate of cooperation tax will continue at 20% from 1st April 2016.

Tax evasion, avoidance and aggressive tax planning

Mr Osborne pledged to tackle tax avoidance and announced that the Government would work to create one of the most “digitally advanced” tax systems on the planet.

By the end of this Parliament, everyone in the UK will have digital tax accounts. The reduction in administration costs form part of £1.9 billion savings for HMRC. 

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Chancellor George Osborne announced the spending plans for the next four years in the Spending Review and the current state of the economy in the Autumn Statement.

According to the Office for Budget Responsibility, public finances are set to be £27 billion better off by 2020.

It was revealed that the government is expected to borrow £8 billion less than forecast due to it hoping to secure £10.1 billion budget surplus by 2020.

The statement brings disappointing news for transport, energy, business and the environment as resource budgets will fall by 37%, 22%, 17% and 15% respectively.

In terms of policing in England and Wales, there are not any plans to make any cuts but the government aims for a rise in spending by £900 million by 2020.

From April 2017 there will be a two-child limit on child tax credit claims and the family element of tax credits will be scrapped for new claimants.

Healthcare is vital for any country and so the health budget will rise to £120 billion by 2020-21, which now stands at £101 billion. The NHS in England will receive an upfront cash injection of £3.8 billion next year as part of £8 billion added funding between next year and 2020-21.

The education budget will rise by £10 billion by 2020 and there will be a new 30-hour free childcare subsidy for parents of three and four-year-olds but this will be limited to parents working more than 16 hours each week.

From April 2016, there will be a 3% surcharge on stamp duty for buy-to-let properties and second homes however, there are plans to hand £2.3 billion to private developers to build 400,000 new homes in England.

State pension will rise by £3.35 a week to £119.30 next year and each individual and small business will have their own digital tax account by the end of the decade.

Transportation could be on the mend with capital funding of transport projects set to rise by 50% by 2020 and £250 million to make sure motorways and other roads in Kent are supported.

Research suggests that due to the new National Living Wage around 3.7 million women will receive a pay rise by 2020.

The government outlined plans earlier this week for employers who do not meet the National Living Wage requirements. It was said that there would be tougher penalties if employers do not follow the rules.

In April 2016 the National Living Wage of £7.20 will come into effect but will only apply to workers who are over 25 years of age. The current minimum wage is £6.50 but this is due to rise next month to £6.70.

The Resolution Foundation report stated that 2.3 million male workers would also benefit, as most employees will see their earnings rise. The report also found that 6 million people will get a wage rise by the end of the decade.

The Chancellor George Osborne originally laid out plans for the wage in the Budget and has recently gained support because of the amount of employees that will benefit. The number of female workers who will benefit from the rise in 2016 totals to nearly 30% of the female workforce and as many women end up in low-paid jobs, they will welcome the new policy.

Income and corporation tax receipts rose to record levels and as a result the UK government borrowing fell to £9.4 billion in June. This is down £0.8 billion from the year before. Income tax receipts rose to £11.5 billion and corporation tax brought in £1.7 billion, according to the Office for National Statistics (ONS). These figures are both record monthly highs.

For the month of June, the result was the lowest borrowing figure since 2008. Despite this, many expected this to drop further to £8.5 billion. However, across the financial year so far, borrowing has fallen by £6.1 billion to £25.1 billion.

Government finances also received a boost of £117 billion last month because of a fine that Lloyds Banking Group paid over its handling of payment protection insurance (PPI) complaints. Not only that, but the Office for Budget Responsibility (OBR) forecast that public borrowing would be £69.5 billion this year. This was revealed in the summer Budget earlier this month.

At the end of June this year, public sector net debt was £1.513 trillion, or 81.5% of annual UK economic output. This is up from 80.8% in May.

By 2019, the government is aiming to eliminate the budget deficit and run a £10 billion surplus in 2020 as well as in future years. In the summer Budget, the chancellor George Osborne stated that there would be £37 billion of spending cuts during this parliament.

The government’s spending review in November will set out £20 billion worth of departmental budget cuts over the next five years.

The Chancellor George Osbourne will deliver the first Conservative Budget in 20 years on Wednesday 8th July.

It is expected that Osbourne will use tomorrows Budget to unveil plans to devolve powers to mayors or councils to decide for themselves what the rule over trading hours should be in their areas.  Which could see shops and supermarkets being allowed to open for longer on Sundays.

Long gone are the days when the only shop open on a Sunday was the local newsagent, open for a few hours in the morning for people to grab a paper or a pint of milk to then go home and spend the day with their family.

Also expected in tomorrow’s Budget:

  • Cut to inheritance Tax – Osbourne is set to increase the inheritance tax threshold to £1m for couples from 2017 a plan that was first laid out in the Conservative Manifesto.
  • Lower benefits cap – Osbourne will deliver on a campaign promise to cut the household benefits cap from £26,000 to £23,000 a year.
  • Hiking council rents – More than 300,000 council tenants will be told that they need to pay market rent if they earn above £30,000 per year.
  • Slashing BBC Subsidy – The BBC will be expected to take on a £650m yearly bill for providing free television licences for pensioners.

We will be reporting on this once the Budget has taken place tomorrow.