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Budget Snapshot 2013
The 2013 Budget statement was made today at 12.30pm by the Chancellor of the Exchequer, George Osborne.
About the Budget
The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover.
The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover.
When the Government publishes the Budget, the Chancellor gives a speech to Parliament in which he sets out the key decisions on tax, borrowing and spending, and his reasons for taking those decisions. This speech is known as the Budget Statement.
The official forecast on which the Chancellor bases the Government’s Budget is provided by the Office for Budget Responsibility (OBR). The Budget Responsibility and National Audit Act 2011 requires the OBR to publish two economic and fiscal forecasts for each financial year, including one published at the Budget. The OBR’s duty is to examine and report on the sustainability of the public finances and it is required to do so objectively, transparently and impartially.
PLEASE NOTE: This update is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief snapshot helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box.
For full details of the following headlines (and more) you may wish to visit the HM Treasury website BUDGET 2013
MAIN HEADLINES FROM THE SPEECH
Forecasts
·Due to the current economic climate the Chancellor announced adjustments to previous growth forecasts from those previously announced.
- Growth forecast for 2013 – revised down to 0.6%
- Growth forecast for 2014 – revised down to 1.8%
- Growth forecast for 2015 – remains unchanged at 2.3%
- Growth forecast for 2016 – remains unchanged at 2.7%
- OBR expects 600,00 more jobs in 2013
- Deficit forecast for 2013/2014 is 7.4%
- Borrowing forecast for 2013 - £114 billion reducing to £97 billion in 2014/2015
- Likelihood of meeting debt target has deteriorated.
Housing
- Help to Buy Scheme introduced - £3.5 billion given to shared equity loans – loan can be provided up to 20% of the value of a new build home – 5% deposit required. – interest free for first 5 years – repaid when home is sold – available to anyone – home can’t be more than £600,000
- New mortgage guarantee to be provided to lenders – available to all homeowners subject to responsible lending requirements being met – This will support £130 billion worth of mortgages – starts in 2014 – Designed to help support people without large deposits
- 15,000 more homes to be built and Right to Buy scheme to be extended further
- Government to accept recommended pay increases for armed forces
Taxation
- Personal tax allowance – to increase to £10,000 from April 2014
- Corporation tax to be reduced by a further 1% in 2015 to 20%
- Schedule 19 tax for UK domiciled funds to be abolished
- Stamp duty on shares trading on growth markets (e.g. Alternative Investment Market (AIM)) to be abolished
- Major tax avoidance and evasion measures to be introduced, including naming and shaming of firms promoting tax avoidance schemes
- Tax free child care vouchers to be introduced – 20% off first £6,000 per child
- Beer duty escalator scrapped altogether and beer duty to be cut on Sunday 24TH March by 1p – all other alcohol duties to increase as planned
Transport/Fuel/Energy
- Fuel – Car fuel duty rise due in September 2013 cancelled indefinitely
- Commitment to low carbon energy via plans to develop major carbon capture and storage projects
- New generous tax regime for early investment in shale gas
Small Business / Business in General
- Capital Gains tax relief for firms sold to employees
- Employment allowance to be introduced – Worth up to £2000 for every business – effective from 2014 to help small and medium size enterprises
Public Sector
- Schools and health departmental budgets to remain protected
- Public Sector pay rises limited to 1% for a further year
Other Points
- New single tier pension brought forward to 2016 - worth £144 per week in today's terms
- Equitable Life With Profit policies sold before 1992 – Government to pay £5000 ex gratia payment to policyholders
- Cap on social care costs to be introduced in 2017 and will protect savings above £72,000
- Residential care threshold for means testing to increase to £118,000 from £23,000 in 2017