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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 is cutting the tax rate for earnings over £150,000, saying in his Budget it raised "next to nothing". | George Osborne is cutting the tax rate for earnings over £150,000, saying in his Budget it raised "next to nothing". |
He is also going to raise the threshold at which people start paying tax to £9,205, leaving millions of working people over £200 better off. | He is also going to raise the threshold at which people start paying tax to £9,205, leaving millions of working people over £200 better off. |
But 4.4 million pensioners will be worse off next year when age-related tax allowances are frozen and axed. | |
Mr Osborne said the Budget "rewards work" but Labour Leader Ed Miliband labelled it a "millionaire's Budget". | Mr Osborne said the Budget "rewards work" but Labour Leader Ed Miliband labelled it a "millionaire's Budget". |
BBC political editor Nick Robinson said the chancellor had taken a huge gamble with changes that might not shape the economy, but would shape politics in the months ahead. | BBC political editor Nick Robinson said the chancellor had taken a huge gamble with changes that might not shape the economy, but would shape politics in the months ahead. |
Other key measures outlined by Mr Osborne were: | Other key measures outlined by Mr Osborne were: |
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Delivering his third Budget, he said: "This Budget supports working families and helps those looking for work. | Delivering his third Budget, 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." | "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 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 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 the rate was the highest among G20 countries and damaged competitiveness. | He said the rate was the highest among G20 countries and damaged competitiveness. |
A report into the highest rate, introduced by Labour in 2010, had found it 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 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." |
'Granny tax' | 'Granny tax' |
He said a further £1,100 rise in the threshold at which income tax is paid from next year would benefit "every working person on low or middle incomes" and amounted to an extra £220 a year each - or £170 after inflation. | He said a further £1,100 rise in the threshold at which income tax is paid from next year would benefit "every working person on low or middle incomes" and amounted to an extra £220 a year each - or £170 after inflation. |
Budget calculator: How are you affected overall? You will be about £0 better off in 2012/13 | Budget calculator: How are you affected overall? You will be about £0 better off in 2012/13 |
Tax allowances are currently more generous for the over-65s - at £10,500 up to age 74 and £10,660 after that. | 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 4.41 million people will be worse off, by an average of £83, in real terms in 2013-14. | |
Mr Osborne said it would simplify allowances and no pensioner would lose out "in cash terms". He pointed to next month's "biggest cash increase in the state pension ever" of £5.30 a week. | Mr Osborne said it would simplify allowances and no pensioner would lose out "in cash terms". He pointed to next month's "biggest cash increase in the state pension ever" of £5.30 a week. |
But the unions said pensioners were "paying the price for a pro-rich Budget". | But the unions said pensioners were "paying the price for a pro-rich Budget". |
TUC general secretary Brendan Barber said the chancellor's decision would "come back to haunt him" and was "already being dubbed 'the granny tax'". | TUC general secretary Brendan Barber said the chancellor's decision would "come back to haunt him" and was "already being dubbed 'the granny tax'". |
HM Revenue and Customs figures also 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 to £41,450. | |
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. | 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. | Mr Osborne also announced there would be limits on uncapped tax reliefs. |
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. |
Labour Leader Ed Miliband labelled it a "millionaire's budget". | 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." |
Deputy Prime Minister and Lib Dem leader Nick Clegg described it as a Budget "every liberal can be proud of". | Deputy Prime Minister and Lib Dem leader Nick Clegg described it as a Budget "every liberal can be proud of". |
John Cridland, director general of the Confederation of British Industry, said: "Family budgets have been under great pressure, and by putting more money in the pockets of ordinary people, the chancellor has provided a much-needed confidence boost." | John Cridland, director general of the Confederation of British Industry, said: "Family budgets have been under great pressure, and by putting more money in the pockets of ordinary people, the chancellor has provided a much-needed confidence boost." |