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Everything you need to know about the UK Budget

  • 23 March 2012

 

BUDGET 101

The Budget is the major financial and economic report made each year by the Chancellor of the Exchequer.

Chancellors use the Budget statement to update Parliament and the nation on the state of the economy, on the public finances and on progress against the Government's economic objectives.

BACKGROUND

George Osborne's budget options were limited because of the government's commitment to cut the country's annual deficits and warnings from two credit rating agencies that Britain could lose its triple A credit rating within the next 12-18 months.

SUMMARY OF KEY BUDGET ANNOUNCEMENTS

The Chancellor's opening salvo: "Mr Deputy Speaker, this Budget rewards work. Britain is going to earn its way in the world. There is no other road to recovery. This Budget supports working families and helps those looking for work. "It unashamedly backs business."

Budget 2012 announced wide-ranging reforms to the tax system. These reforms will lower headline rates, diversify and broaden sources of revenue, and reduce reliefs. The reforms were based on the principle that the tax system should be fair, efficient and simple.

It also divulged the next phase in the government's plans to support businesses, through the measures announced in The Plan for Growth and Autumn Statement 2011.

 

KEY POINTS BY SECTOR

Economy

Tax

  • Top rate to be reduced from 50p to 45p from April 2013.
  • Personal tax allowance – the threshold at which workers start paying income tax – will rise to £9,205 in April 2013, up £1,100 from £8,105 n April 2012.

Business

Pensions

Public finances

Transport

  • The government will invest £130 million in the Northern Hub rail scheme.
  • Fair fuel stabiliser means above-inflation rises in fuel duty will return only if price of oil falls below £45 a barrel.

 

FALLOUT

Not surprisingly, the cut in the top rate of tax for high earners sparked heavy protests from the public. The Chancellor's announcement that he will phase out the higher income tax allowance enjoyed by around half the country's pensioners also brought outrage. Here's some of the fallout from the budget:

 

ANALYSIS

 

FURTHER READING

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