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Budget 2012: George Osborne cuts 50p top tax rate | Budget 2012: George Osborne cuts 50p top tax rate |
(40 minutes later) | |
George Osborne has announced cuts to the top rate of income tax - and an increase in the amount of money people can earn before they start paying tax. | |
The chancellor said the 50p rate was uncompetitive, raised "next to nothing" and would fall to 45p next year. | |
The personal tax allowance will rise to £9,205 for millions of working people while child benefit cuts will be phased in for those on more than £50,000. | |
Labour's Ed Miliband said millionaires would get a "massive income tax cut". | |
He said Mr Osborne had spoken for an hour but: "There was one thing he didn't say: today marks the end of 'we are all in it together'." | |
Delivering his third Budget, Mr Osborne also said tobacco tax would rise by 5% above inflation, adding 37p on 20 cigarettes. The scheduled 3p rise in fuel duty in August will go ahead. | |
He defended the politically risky decision to cut the top rate of tax by saying five times as much would be raised from the wealthiest by other tax and anti-avoidance measures being brought in. | |
He said a report into the highest rate introduced by Labour in 2010, had found it had caused "massive distortions" - and had raised just a third of the £3bn expected. | |
"No chancellor can justify a tax rate that damages our economy and raises next to nothing," he said. | |
Stamp duty changes | |
The threshold at which income tax is paid had been due to rise to £8,105 next month and will now increase to £9,205 in 2013. | |
Mr Osborne said it would benefit "every working person on low or middle incomes" and amounted to an extra £170 a year after inflation. | |
A new 7% rate of stamp duty would be charged on properties worth more than £2m - and anyone trying to buy a £2m home through an offshore company would face a punitive 15% tax rate. | |
Child benefit had been due to be removed from all families with at least one parent paying the higher, 40% rate, of income tax - about £43,000 - from January 2013. | |
But Mr Osborne said he wanted to avoid a "cliff edge" effect - so it would now only be withdrawn when someone in a household earned more than £50,000, at a rate of 1% of the benefit for every £100 up until £60,000, when it would be cut entirely. It meant 750,000 more households would not now lose all their child benefit. | |
Corporation tax | |
He said corporation tax would be cut more than expected from next month, by one percentage point to 24%, falling to 22% by 2014, something he said would be "an advertisement for investment and jobs in Britain". | |
Mr Osborne also announced caps on currently uncapped tax reliefs and said he would get rid of age-related allowances, introducing a new single personal allowance for all. | |
In his last big financial update - the Autumn Statement in November - the chancellor lowered growth forecasts for the UK economy and extended the period of spending cuts by a year to 2016-17. | In his last big financial update - the Autumn Statement in November - the chancellor lowered growth forecasts for the UK economy and extended the period of spending cuts by a year to 2016-17. |
But he was able to nudge up the growth forecast for 2012 - which had been revised down from 2.5% to 0.7% - to 0.8% and said he was "on course" to eliminate the structural deficit by 2016/7. | |
He also said the Independent Office for Budget Responsibility expected the UK would avoid a "technical recession" - but that the eurozone crisis and a spike in oil prices continued to pose risks. | He also said the Independent Office for Budget Responsibility expected the UK would avoid a "technical recession" - but that the eurozone crisis and a spike in oil prices continued to pose risks. |
In other announcements, he said the state pension age would be automatically reviewed, to ensure it kept pace with changing life expectancy. | In other announcements, he said the state pension age would be automatically reviewed, to ensure it kept pace with changing life expectancy. |
More help for the armed forces was announced - with £100m improvements to accommodation. | |
And he said the UK must "confront" the lack of airport capacity in the south east - and more would be announced this summer. The government scrapped plans for a third runway at Heathrow. | And he said the UK must "confront" the lack of airport capacity in the south east - and more would be announced this summer. The government scrapped plans for a third runway at Heathrow. |
But Labour Leader Ed Miliband labelled it a "millionaire's budget". | |
"Tax credits cut, child benefit taken away, fuel duty rising - and what has he chosen to make his priorities? | |
"For Britain's millionaires, a massive income tax cut each and every year." | |
What is your reaction to the Budget? Do you have any questions? Paul Lewis from Radio 4's Money Box will answer a selection of your questions on BBC Two and the BBC News Channel. You can send us your comments and questions using the form below. | What is your reaction to the Budget? Do you have any questions? Paul Lewis from Radio 4's Money Box will answer a selection of your questions on BBC Two and the BBC News Channel. You can send us your comments and questions using the form below. |