Budget 2016: Osborne reveals ‘lifetime pension’
George Osborne was keen to emphasise that the Conservatives make a “Government for working people” in the Budget this year, and announced measures covering pensions savings as well as food and drink.
One of the standout announcements the Chancellor was a lifetime ISA, allowing younger people major incentives to save for a pension or to buy a house, as Osborne attempts to “put the next generation first.”
He admitted that under 40s “haven’t had a good deal from the pensions system” and for every £4 saved, the Government promises to match it with £1, so that fewer people will have to make the choice between saving for old age or saving for a mortgage.
Osborne said that he intends to make pensions more like the 401k of the US system.
It led commentators to question the role of personal pensions and auto-enrolment.
The Chancellor also announced that the tax-free personal allowance is being raised to £11,500.
He said 31m people will be paying less tax and 1.3m of the lowest paid taken out of tax altogether.
Osborne also announced the higher rate threshold will rise from £42,385 to £45,000 from April next year.
Insurance premium tax is set to rise by 0.5% to 10% with proceeds diverted to flood relief
From April 2018 employers will need to pay National Insurance contributions on pay-offs, such as termination payments above £30,000 where Income Tax is also due.
If you lose your job, payments of up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.
The Chancellor projected that 1m more jobs will be added to the economy in the coming year, with the lowest proportion of people on out-of-work benefits since 1974, and despite cuts, said that the disability budget will rise by £1bn under this Government.
The Chancellor also set out action in the red book to crack down on disguised remuneration schemes and tackle imbalances in the system. He said that actions over tax avoidance and evasion will raise £12bn over this Parliament
In terms of consumables, the Chancellor announced a freeze on fuel duty which he said was worth £7bn a year for the sixth time in a row. He says the move means a £75 a year saving for the average driver, and called it a measure to “keep Britain on the move.”
A newly-announced sugar tax is set to raise £520m in a two-part levy on companies to be introduced in two years’ time (pure fruit juice excluded).
The tax will be used to pay for longer school days, following the abolition of the 3.30pm school bell, as well as further sporting activities.
Osborne said he wanted to “support responsible drinkers” prompting him to freeze beer and cider duty, as well as that of Scotch whiskey, a major UK export. All other alcohol duties will rise by inflation as planned.
Tobacco duty continue to rise 2% above inflation, as the Government “continues to improve public health” and will introduce a floor on the price of cigarettes with increased sanctions for fraud in relation to exporting cheap cigarettes from abroad.