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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 50p top rate of income tax, saying it was uncompetitive, raised "next to nothing" and would fall to 45p in 2013. | |
He is also going to raise the threshold at which people start paying tax to more than £9,000, leaving millions of working people over £200 better off. | |
But 4.4m pensioners will be worse off next year as a result of age-related tax allowances being frozen and axed. | |
But Labour Leader Ed Miliband labelled it a "millionaire's Budget". | |
BBC political editor Nick Robinson said the chancellor had taken a huge political gamble, that by arguing that overall the rich would pay more, the public would overlook what amounted to a significant tax cut for tens of thousands of wealthy people. | BBC political editor Nick Robinson said the chancellor had taken a huge political gamble, that by arguing that overall the rich would pay more, the public would overlook what amounted to a significant tax cut for tens of thousands of wealthy people. |
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. | 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. |
His plans would reward work, he said: "This Budget supports working families and helps those looking for work. It unashamedly backs business. And it is on the side of aspiration: those who want to do better for themselves and for their families." | His plans would reward work, he said: "This Budget supports working families and helps those looking for work. It unashamedly backs business. And it is on the side of aspiration: those who want to do better for themselves and for their families." |
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 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. |
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 initially predicted, Mr Osborne 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 initially predicted, Mr Osborne said. |
"No chancellor can justify a tax rate that damages our economy and raises next to nothing." | "No chancellor can justify a tax rate that damages our economy and raises next to nothing." |
Stamp duty changes | 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. | 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 each after inflation. | Mr Osborne said it would benefit "every working person on low or middle incomes" and amounted to an extra £170 a year each after inflation. |
Age-related tax allowances are currently more generous for the over-65s - at £10,500 up to age 74 and £10,660 after that. | Age-related tax allowances are currently more generous for the over-65s - at £10,500 up to age 74 and £10,660 after that. |
But they will be frozen, and stopped for anyone turning 65 after 5 April 2013, meaning 4.41m people will be worse off, by an average of £83, in real terms in 2013-14. | But they will be frozen, and stopped for anyone turning 65 after 5 April 2013, meaning 4.41m people will be worse off, by an average of £83, in real terms in 2013-14. |
And HM Revenue and Customs figures show that 300,000 people will be drawn into paying the 40% higher rate tax from 2013/14 because of a reduction in the threshold. | And HM Revenue and Customs figures show that 300,000 people will be drawn into paying the 40% higher rate tax from 2013/14 because of a reduction in the threshold. |
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 a company would face a punitive 15% stamp duty 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. | 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. | 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. | It meant 750,000 more households would not now lose all their child benefit. |
Corporation tax | Corporation tax |
He said corporation tax would be cut more than expected from next month, to 24% rather than 25% as planned, falling to 22% by 2014, something he said would be "an advertisement for investment and jobs in Britain". | He said corporation tax would be cut more than expected from next month, to 24% rather than 25% as planned, falling to 22% by 2014, something he said would be "an advertisement for investment and jobs in Britain". |
Mr Osborne also announced there would be limits on uncapped tax reliefs and said he would get rid of age-related allowances, introducing a new single personal allowance for all. | Mr Osborne also announced there would be limits on 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. | 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. | 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". | 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? | "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." | "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. |