The Chancellor of the Exchequer, George Osborne MP, delivered on 22 June what he described as a ‘tough but fair’ emergency Budget. In his speech, the Chancellor set out his five-year plan to reduce the Budget deficit, rebalance the British economy and design a new model for economic growth.
There will be a two-year pay freeze for public sector workers earning more than £21,000, although the 1.7 million lowest paid will get a flat £250 pay rise each year. Limits will be put on the salaries of the highest paid public sector workers.
Around 880,000 workers will no longer pay income tax after the Chancellor raised the personal allowance by £1,000 to £7,475 from £6,475. Basic-rate taxpayers will be £170 a year better off as a result. Those earning more than £40,000 will not benefit because they will be subject to the rise in National Insurance contributions, a Labour policy that Mr Osborne has decided to retain.
For investors, basic-rate taxpayers will continue to pay capital gains tax (CGT) at 18 per cent and the annual exemption of £10,100 remains. Higher-rate taxpayers will now pay 28 per cent.
Child tax credits will be withdrawn for families earning more than £40,000 a year, rather than £50,000, while child benefit will be frozen for the next three years.
For business, there were reductions in corporate tax rates and proposals to consult on corporation tax reform. However, the banking sector will have to bear the cost of a new bank levy.
