Chancellor to the exchequer (fancy words meaning the government’s money man) George Osborne, announced his eighth budget yesterday and as always it’s caused a stir. The Budget is a breakdown of how the money you pay our government in tax, is spent. So what’s the biggie? What impact will budget changes have on you and your personal fortune?
Osborne chatted all things money for 62 minutes in a chamber full of raucous MPs yesterday. Some were hurling abuse and some were hurling love at Osborne for his latest budgetary changes. The theme was all about tax and savings, this is what you need to know about the Budget 2016.
1. Perhaps the biggest Budget 2016 surprise was a new sugar tax on the sugary drinks industry. It’ll be introduced in two years time and will raise £520 million a year for the government. It does mean that those sugary cans of delight will be more expensive, but this extra dollar will be spent on doubling the funding for sports in primary schools in England. It’s proved a divisive move, much of the twitter abuse/love was over this exact tax, get the debate breakdown.
2. If you’re under 39, good news, Osborne announced a major plan to introduce a ‘Lifetime Isa’. Now though it may sound like a pretty crappy cocktail, it actually stands for Individual Savings Account. It means when you take your precious pennies out of your savings account you won’t be taxed for doing so. From April 2017, peeps under 40 can save up to £4,000 each year into their Lifetime Isa and receive a 25% contribution from the government, meaning for every £4 you save, our government will add an extra £1…say whattttt?
3. If you like a beverage of the alcoholic kind then there’s good news and bad. Tax on beer and cider is to be frozen, the same goes for whisky and other spirits. If wine’s your poison then duties (tax) will rise in line with inflation, meaning that a glass of vino on a Friday night could get more expensive.
4. Bad news for smokers, government tax on tobacco will increase meaning your trusty tabs will become more expensive.
5. Awkward for Osborne, what he predicted in his Autumn statement last year was that our economy would grow by 2.4%, well that’s had to be revised down to just 2%. Sounds bad, but Osborne insists that our global economy is weaker than it was before and that the UK is not immune to changes in the global economy. If the global economy is growing then the UK can feed off that, but if it’s slowing like it is now, then the UK’s economy can be impacted negatively. This means the country will have to borrow more money in the next couple of years, but Osborne insists that by 2019-20 the UK will be surplus by £10.4 billion, in other words the UK government will have more money to play with.
6. If you’re a petrolhead or use your vehicle on a daily basis then you’ll be happy to hear that Fuel Duty will remain frozen, meaning you won’t be paying more to fill up your car. Osborne wants UK consumers to benefit from the recent decrease in the price of oil.
7. From schools to academies: the government wants to end council control of England’s schools. It’s been dubbed a “radical shakeup” of our school system and will ensure that all schools become academies by 2022. This means they will be independent of local authorities; they don’t have to stick to the national curriculum, they can set their own term times and they are funded by the government directly and not via their local authority. The government will also set aside a £1.5 billion fund which schools will be able to use to provide an extra five hours of teaching or activities a week, aka a longer school day.
8. Income tax (a tax directly placed on the precious pennies you earn from your job) won’t be imposed on UK citizens until they are earning at least £11,500 a year and the higher rate won’t kick in until you’re earning over £45,000 a year.
9. If you run a small business you’ll pay less tax and larger companies will find that those loopholes which allow them to avoid paying large sums of corporate tax will be closing.
The reaction to the Budget 2016
The Budget always sparks a mixed response, it does after all, dictate how much money people may lose or save in their day to day lives. Opposition leader, Jeremy Corbyn, was really keen to highlight that this budget was a failure, in fact he said it seven times in 10 seconds. Corbyn was also keen to highlight that this budget has “unfairness at its very core”, attacking Osborne’s cuts to disability benefits.
As always the Budget is a good opportunity for the government to play down the failures and big up the successes – that’s politics.
For a full breakdown of the changes announced:
And to read the full speech:
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