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Budget 2014: Tax changes to boost pensioners and savers Tax changes to boost pensioners and savers in Budget
(about 1 hour later)
George Osborne has unveiled measures to boost the income of pensioners and savers hit by low interest rates.George Osborne has unveiled measures to boost the income of pensioners and savers hit by low interest rates.
In his Budget speech, he made tax-free Isas more "generous" and unveiled a million new "pensioner bonds".In his Budget speech, he made tax-free Isas more "generous" and unveiled a million new "pensioner bonds".
The amount people earn before tax will also go up by £500 to £10,500. The amount workers earn before tax will also go up by £500 to £10,500.
The chancellor also froze petrol duty, cut bingo tax from 20% to 10%, froze Scotch whisky and cider duty and cut a further 1p from a pint of beer - but put the price of cigarettes up. The chancellor also froze petrol duty, cut bingo tax from 20% to 10%, froze spirits and cider duty and cut a further 1p from a pint of beer - but put the price of cigarettes up.
Labour leader Ed Miliband said he failed to mention in his speech that "the working people of Britain are worse off under the Tories, living standards down month after month, year after year". Labour leader Ed Miliband said Mr Osborne failed to mention in his speech that "the working people of Britain are worse off under the Tories, living standards down month after month, year after year".
Measures announced in Mr Osborne's fifth Budget speech include:Measures announced in Mr Osborne's fifth Budget speech include:
In a surprise announcement at the end of his 55 minute-long Budget speech, Mr Osborne said cash shares and Isas were to be merged into a single New Isa with an annual tax-free savings limit of £15,000 from 1 July. The limit for Junior Isas will be raised to £4,000. The "surprise" which was the focus of speculation ahead of the 55-minute speech came at the end as Mr Osborne said cash and share Isas were to be merged into a single New Isa with an annual tax-free savings limit of £15,000 from 1 July. The limit for Junior Isas will be raised to £4,000.
He also outlined a new Pensioner Bond paying market leading rates to be available from January to all people over 65, with interest rates of 2.8% for one-year bonds and 4% for three-year bonds. Pensioners will have the freedom to cash in as much or as little of their pension pot as they want, removing the need to buy an annuity.
Mr Osborne also outlined a new Pensioner Bond paying market leading rates to be available from January to all people over 65, with interest rates of 2.8% for one-year bonds and 4% for three-year bonds.
He said the changes - due to come into law by April next year - were "the most far-reaching reform to the taxation of pensions since the regime was introduced in 1921".
The cap on the amount of Premium Bonds a person can own will rise from £30,000 to £40,000 in June and £50,000 in 2015. The number of £1m winners will also be doubled.The cap on the amount of Premium Bonds a person can own will rise from £30,000 to £40,000 in June and £50,000 in 2015. The number of £1m winners will also be doubled.
In a move aimed at helping middle income workers, Mr Osborne said the higher rate income tax threshold will rise from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year.In a move aimed at helping middle income workers, Mr Osborne said the higher rate income tax threshold will rise from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year.
Mr Osborne also unveiled plans to support economic recovery - including tax breaks to boost productivity, exports and manufacturing.Mr Osborne also unveiled plans to support economic recovery - including tax breaks to boost productivity, exports and manufacturing.
He said Britain was growing at a faster rate than any other advanced economy - revising growth forecasts up to 2.7% in 2014 - but he warned the job of recovery was "far from done".He said Britain was growing at a faster rate than any other advanced economy - revising growth forecasts up to 2.7% in 2014 - but he warned the job of recovery was "far from done".
He told MPs: "We are putting Britain right but the job is far from done. This country still borrows too much, we still don't invest enough, export enough or save enough." He told MPs: "The message from this Budget is: you have earned it, you have saved it, and this government is on your side, whether you're on a low or middle income, whether you're saving for your home, for your family or for your retirement.
He added: "This is a Budget for building a resilient economy. If you're a maker, a doer or a saver: this Budget is for you. "The forecasts I've presented show: growth up; jobs up; and the deficit down.
"It is all part of a long term economic plan - a plan that is delivering security for the people of this country." "With the help of the British people we're turning our country around. We're building a resilient economy.
"This is a Budget for the makers, the doers, and the savers."
New pound coinNew pound coin
He said the Office for Budget Responsibility was forecasting that the economy would overtake its pre-crisis peak later this year.He said the Office for Budget Responsibility was forecasting that the economy would overtake its pre-crisis peak later this year.
The deficit would be lower than expected this year at 6.6% - and he said the government was on track to post a surplus of 0.2% in 2018/19, according to the OBR forecasts.The deficit would be lower than expected this year at 6.6% - and he said the government was on track to post a surplus of 0.2% in 2018/19, according to the OBR forecasts.
On the plans for a cap on welfare spending, he told a packed House of Commons: "Britain should always be proud of having a welfare system that helps those most in need. Labour leader Ed Miliband - in his Budget response - said most people's standard of living was falling "sharply" under the coalition government.
"But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work." He told MPs: "Whose recovery is it under the Tories? Under them it is a recovery for the few, not the many.
Mr Osborne insisted before the Budget that deficit reduction remained his number one priority, with the ultimate goal of delivering an annual budget surplus before 2020. Critics say he has missed targets and has borrowed billions more than originally planned in 2010. "We know what their long term plan is, tax cuts for the richest whilst everyone else gets squeezed."
In the run-up to the Budget, the government announced plans to offer up to £2,000 in subsidised childcare to working families after the next general election, a proposed rise in the hourly minimum wage to £6.50 and an extension of the Help to Buy Scheme for aspiring homebuyers.
Labour Leader Ed Miliband said families had become £1,600 a year worse off under the coalition - and he urged the chancellor to unveil measures to ease the cost-of-living crisis in his Budget speech.
Labour has pledged that if it wins the next election, it will reinstate the 10p tax rate for low earners and raise the top rate of tax to 50p for those earning more than £150,000 a year.Labour has pledged that if it wins the next election, it will reinstate the 10p tax rate for low earners and raise the top rate of tax to 50p for those earning more than £150,000 a year.
John Cridland, director general of business group the CBI, said the Budget would "put wind in the sails of business investment, especially for manufacturers".
But TUC general secretary Frances O'Grady described it as a "highly political short-term Budget that continued the Chancellor's project to shrink the state and help the rich".
Plaid Cymru's leader at Westminster, Elfyn Llwyd, welcomed plans to boost capital investment but said there was "little cheer" for small firms.
A UKIP spokesman said: "It is clear that this government's economic policies which will take Britain's national debt to £1.4 trillion by the end of this Parliament have not worked and has simply added to the economic damage done by Labour."
Do you have a Budget question for one of our experts? Email us at haveyoursay@bbc.co.uk adding 'Budget' in the subject heading and including your contact details.Do you have a Budget question for one of our experts? Email us at haveyoursay@bbc.co.uk adding 'Budget' in the subject heading and including your contact details.