The Spring Budget 2016 at a glance: some key talking points
With the British economy stuttering and stormclouds looming heavily over the global economy, coupled with our still-rising national debt, nobody really knew what to expect from yesterday’s budget.
Some experts feared a budget which would be austere and full of deep spending cuts. However what we ended up with was something altogether more bland, as George Osbourne erred on the side of caution and tried to avoid doing anything that would get up the nose of voters any more than he already has.
That isn’t to say yesterday’s budget was controversy-free, however. A fresh round of spending cuts which aim to save the government £4 billion has largely come at the expense of disabled Britons, who will see their benefits slashed over the coming 12-months. However this unpleasant little surprise aside, the 2016 budget is by no means a bad one for working Brits in the grand scheme of things.
Here’s a look at some of the key talking points from Osbourne’s little red box of treats.
The ‘sugar tax’ – be prepared to spend more for your Pepsi
Fizzy pop lovers and anybody with a sweet tooth turn away now. In a move which will earn £520 million for the treasury per year, Osbourne announced the imposition of a two-part tax on drinks companies – one for drinks with a total sugar content above 5g per 100ml, and one for drinks with more than 8g per 100ml – in two years’ time. It is expected that this will add 50p to the price of a 2-litre bottle of Coke.
News of the new sugar tax has generated a mixed reaction. Some see it as a policy which may help cut back our consumption of sugar-heavy drinks, which may help fight obesity, while others see it as a cynical money-grab, and a tax of sorts on the poor.
Tax thresholds for low and high-earners raised
We all like more money, don’t we? We know this, and the government definitely knows this.
In a move that’s aimed at offering a helping hand to low-earners, Osbourne announced yesterday that a rise in the tax-free personal allowance from £10,800 to £11,500 is on the cards for next April – in case you’re not aware, this is the sum of money that you can earn up to before you are required to start making income tax payments.
Combined with the gradual increases to the national minimum wage each year, as the government works towards a £9 per hour living wage by 2020, this means a little extra spending power for lower-earning Brits a year or two from now – this will come as little consolation to the working poor who are struggling presently, however.
On the other end of the spectrum, the 40p rate tax threshold is also set to rise next April from £42,385 to £45,000 – a move which is aimed at the middle-classes, and which will lead to over half a million higher-earners being removed from the highest tax bracket.
The new Lifetime ISA for under 40’s
A good’un for the younger generations, who often get overlooked by our political overlords. The unveiling of a new savings account, the Lifetime ISA, is designed to help younger people save money, with a helping hand from the government.
Quite simply, it’s aimed at helping under 40’s who are looking to get on the housing ladder or save towards retirement. The Lifetime ISA – which can be invested in stocks & shares or cash savings – will see the government give you a top-up of £1 for every £4 that you save, so long as you use it for buying a home or a retirement fund. As an example, if you invest £4,000 in a year, your yearly savings will be topped-up with a £1,000 bonus.
However there are stiff penalties for making withdrawals from your ISA which are unrelated to house buying or retirement – if you cash in at any point, you’ll lose your government bonus and accrued interest, and incur a 5% charge on your balance.
Fuel duty frozen… again
Perhaps wisely, George Osbourne announced that fuel duty would be frozen for the sixth-successive year.
British motorists already pay the highest fuel tax burden in the EU, with between 61-59p per £1 spent at the pumps going to the treasury in fuel duty and VAT, so a tax freeze is no bad thing.
Disability benefits to be cut by up to £150 per week
Certainly, the most controversial element of the 2016 budget came when Osbourne confirmed that cuts to Personal Independence Payments for the disabled would go ahead.
The proposed cuts, which could see disabled claimants lose up to £150 per week, and will save the government £4.5 billion between now and 2021, have caused outrage, even amongst a number of rebel MP’s in his own party. To put it politely, this could prove to be a highly toxic decision on the government’s part – one which makes the previous fiasco over cuts to tax credits look like a vicar’s tea party.
For the drinkers: raise a toast if you drink beer, cider or whiskey – duties have been frozen… but be prepared to spend more for your wine and cigs
It’s usually a given that the government will use ‘sin taxes’ on alcoholic tipples and cigarettes as a way of raising extra cash – this year’s budget is no different.
That said, it’s only wine drinkers who should be reaching for the Kleenex this year – duty on beer, cider, and whiskey has been frozen, meaning that prices at the pub and the supermarkets should remain as they are over the next 12-months. Be prepared to pay more for your Merlot, Rioja, Prosecco or Pinot Grigio however.
And about cigarettes – well, we smokers can complain a little, but it’s hard to really object to the rising cost of our habits.
For a closer look at the list of key announcements to come from Osbourne’s 2016 budget, pay a quick visit to the BBC’s budget summary here.
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