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Osborne's triple whammy as he mugs 5m pensioners with £3bn hidden 'granny tax', drags 300,000 more workers into higher tax band and refuses to stop rise in fuel duty
Five million pensioners take £260 a year hit in £3bn 'hidden' raid after tax allowances are changed
300,000 workers dragged into 40% bracket by lowering of income tax threshold - but move wasn't announced in Osborne's speech
Families see income tax threshold raised by £1,000 meaning extra £346 a year for basic rate taxpayers with 2m lifted out of income tax altogether
Corporation tax cut by 2% to 24% by April 1 and will drop further by 2014
Rise in stamp duty to 7% for homes worth over £2m
50p income tax rate is reduced to 45p and tax loopholes to be closed
Promises to hit rich for five times as much money each year and does not rule out Lib Dem's 'mansion tax' in the future
Climbdown over child benefit with threshold raised to £60,000
37p extra on price of a packet of 20 cigarettes as of 6pm tonight
Fuel duty to rise by 3p in August despite record petrol prices
Osborne announces review that could lead to retirement age rising above 70 much earlier than planned
George Osbornes Budget was swiftly
unravelling this afternoon as it emerged that the Chancellor has
launched a £3bilion tax raid on five million pensioners and dragged an
extra 300,000 workers into the 40p tax bracket.
Despite
his attempts to present the Budget as a Robin Hood tax raid on the
super-rich to help the poor, it soon emerged that the biggest money
spinner was a granny tax grab on half of the countrys pension
population.
Mr Osborne was
also facing a furious backlash after it emerged that 300,000 people will
be dragged into the 40 per cent rate of tax to help pay for a rise in
the income tax personal allowance announced in the Budget.
SCROLL DOWN FOR VIDEO
'Earn our way out': George Osborne today unveiled his Budget and promised help for struggling low and middle income earners
[h=2][/h]
In the red: Chancellor George Osborne leaves Number 11 Downing Street today on his way to Parliament to present the 2012 Budget
The decision was included in the
Budget document, but not announced by Chancellor George Osborne in his
speech to the House of Commons today.
Meanwhile,
Mr Osborne enraged motorist by ignoring calls to freeze a 3p per litre
fuel duty rise which will come into effect in August will also wipe out
the income tax gains for millions of workers who drive regularly.
The
triple whammy of controversial measures, which were glossed over during
the Budget, are set to penalise pensioners and workers on modest
incomes.
The most
politically explosive of Mr Osbornes announcements were his plans to
axe the higher income tax allowance enjoyed by around five million
elderly people.
Elderly
campaigners branded the move an outrageous assault on middle-class
pensioners and within hours of the announcement, the subject Granny
Tax was trending worldwide on Twitter.
The
tax grab, which critics warned had echoes of former Prime Minister
Gordon Browns stealth tax bombshells, means that from next year, people
turning 65 will no longer qualify for the higher rate of
£10,500-a-year.
Instead, they will continue to qualify for just a standard income tax allowance which was raised today to £9,205.
Individuals affected will pay an extra £260-a-year extra in tax more than they would have done.
Protesters: A police officer attempts to
disperse demonstrators who gathered near the Houses of Parliament to
protest against cuts to public services today
In a further assault, existing pensioners will have their tax allowance frozen at the £10,500 level indefinitely.
The Treasury have calculated the measures will raise £3.3billion over the next five years.
Meanwhile,
it has emerged that the amount that people can earn in a year before
they begin to pay higher rate 40 per cent tax will fall by £2,475 to
£41,450 in 2013.
Currently, workers can earn £42,475 before they begin to pay 40 per cent tax.
This means that an extra 300,000 basic rate taxpayers will end up being hit with a higher rate of tax.
Ahead
of todays announcements, aides of Mr Osborne had spun the Budget as a
tax-give away for millions of hard-working families and businesses paid
for by new taxes on the super-rich.
The
centrepiece was supposed to be plans to increase the tax-free personal
allowance to £9,205 lifting two million people out of paying tax
altogether and putting £346-a-year in the pockets of basic rate
taxpayers.
But within
minutes of sitting down, he was plunged into a row over a 'hidden'
£3billion tax raid on half the country's pensioners after changes to
their tax allowances.
In
another sting in the tail, Mr Osborne also announced plans for a rise in
the state pension age that could force millions of workers to delay
their retirement until their 70s much earlier than previously thought.
All in this together? Business Secretary Vince
Cable - who would be expected to sit near the Chancellor - watches the
Budget from the sidelines
Long day ahead: George Osborne at the gates of Downing Street this morning before he unveiled the Budget
Dr Ros Altmann, Director-General, Saga said: This is an outrageous assault on decent middle-class pensioners.
'This
Budget contains an enormous stealth tax for older people. Over the next
five years, pensioners with an income of between £10,000 and £24,000
will be paying an extra £3 billion in tax while richer pensioners are
left unaffected.
'There is
nothing in this Budget for savers, there is nothing to improve the
annuity market, nothing to appease the damage of quantitative easing and
nothing to support ISA changes and shelter older peoples money in
cash. This Budget is terrible news for pensioners.'
Dot
Gibson, general secretary of the National Pensioners Convention, said:
Many older people will feel they are being asked to forego their
reduction in tax to help out the super rich. Theres no fairness in
that.
[h=3]'MILLIONAIRES WILL PAY LESS': ANGER OF LABOUR'S MILIBAND[/h]Labour leader Ed Miliband tore into the Budget today after George Osborne announced plans to cut the top rate of income tax.
He told MPs: 'After todays Budget, millions will be paying more while millionaires pay less.'
The Chancellor used his Budget to announce that the 50p top rate of tax will drop to 45p from April next year.
In
his response to the statement, Mr Miliband told the Commons it marked
the end of the Governments claim that 'we are all in it together'.
In
a raucous Commons, Mr Miliband labelled it a 'millionaires Budget' and
said: 'The Chancellor spoke for an hour but one of his phrases was
missing.
'There was one thing he didnt say: today marks the end of "we are all in it together".'
Mr
Miliband said: 'A year ago the Chancellor said in his Budget speech,
"Now would not be the right time to remove the 50p tax rate when we are
asking others in our society on much lower incomes to make sacrifices."
'That
is exactly what he has done: tax credits cut, child benefit taken away,
fuel duty rising - and what has he chosen to make his priorities?
'For Britains millionaires, a massive income tax cut each and every year.'
Mr Osborne insisted that no pensioners will lose out in cash terms and that the move would help simplify the system.
However, Labour leader Ed Miliband said it amounted to a hidden tax rise on millions of pensioners.
Mr Osborne insisted that his Budget would earn its way in the world after he announced plans to slash corporation tax.
Meanwhile,
the Chancellor announced a new top rate of 7 per cent stamp duty on
£2million homes which comes into force at midnight tonight, together
with a crackdown on morally repugnant millionaire tax avoidance.
Mr
Osborne also left the door open for the Lib Dem's 'mansion tax' - an
annual levy on homes worth £2m or more - to come into force at a later
date by ordering a review into the idea.
An impassioned Mr Osborne told MPs: 'This country borrowed its way into trouble. Now it will earn its way out.'
In
a hugely controversial move, the Chancellor said the Government would
launch a review into introducing a radical new link between the pension
age and life expectancy which will report back by the summer.
Labour leader Ed Miliband tore into the Budget today after George Osborne announced plans to cut the top rate of income tax.
He told MPs: 'After todays Budget, millions will be paying more while millionaires pay less.'
The Chancellor used his Budget to announce that the 50p top rate of tax will drop to 45p from April next year.
In
his response to the statement, Mr Miliband told the Commons it marked
the end of the Governments claim that 'we are all in it together'.
Mr
Osborne also courted controversy by committing himself to lowering the
top 50p rate of tax to 45p after announcing it had had raised just a
third of £3billion it was expected to.
Plans: Prime Minister David Cameron this morning after a pre-Budget Cabinet meeting
The Chancellor said that other measures to hit the rich would take five times more from them that the 50p rate.
He said: No Chancellor can justify a tax rate that damages our economy and raises next to nothing.
'And
thanks to the other new taxes on the rich I have announced today, we
will be getting five times more money each and every year from the
wealthiest in our society.
Announcing a crackdown on multi-millionaires, he said: I regard tax evasion and aggressive tax avoidance as morally repugnant.
Other headline-grabbing moves included a 37p increase in cigarette duty which comes into effect tonight.
Just
hours before the Budget, Prime Minister David Cameron told the Cabinet:
This budget demonstrates our values helping working people and
boosting enterprise.
'We are sorting out the taxes that dont raise money and dragging things down while helping those at the bottom.
How the Budget will affect you: Allowances
over the next tax year - but graphic does not include 2013/14 when
pensioners will see a reduction in their allowance
[h=1]The major areas covered in the 2012 Budget[/h][h=2][/h][h=2]Stamp Duty hit for homes sold for more than £2m
[/h]
A tax grab on wealthy homebuyers almost all of them in London and the South East was unveiled in todays Budget.
In
an attempt to show that the rich will be squeezed when the 50p top rate
of income tax is lowered, George Osborne introduced a 7 per cent top
band for stamp duty on homes costing £2m or more.
It means a minimum tax contribution of £140,000 by someone buying a residential house costing £2m or more.
The move comes just 12 months after the introduction of a 5 per cent band on homes bought for more than £1m.
The
new rate will allow the Government to milk high-end wealth particularly
in expensive enclaves of London, appealing to 'squeezed middle' voters.
But
it will also avoid a costly general revaluation of homes across the
country that would have been required if the Lib Dem's 'mansion tax' or
annual levy was implemented.
[h=2]Child benefit cut-off raised
[/h]Families
receiving child benefit were offered some relief today when George
Osborne announced that the cut-off point will be £60,000.
The
Government had been keen on scrapping child benefit for any person
earning more than the £42,475 threshold for 40 per cent tax.
But the proposals were condemned by charities, women's groups and family campaigners.
Child benefit will now only be completely withdrawn when somebody earns £60,000.
It will be tapered off after £50,000 to avoid a 'cliff edge'.
The
Chancellor told the House of Commons today: 'Mr Deputy Speaker, in the
Spending Review, we took the difficult decision to remove child benefit
from families with a higher rate taxpayer.
'I
said then that I simply could not justify asking those earning £15,000
or £30,000 to go on paying Child Benefit to those earning £80,000 or
£100,000. And I stand by that principle.
[h=2]Income tax cut for 23m... and the super-rich
[/h]
Millions of workers will be hundreds of pounds a year better off when the income tax threshold is raised.
Some
23 millions basic rate taxpayers will see their personal allowance -
the amount they can earn before paying tax - rise to £9,205 from April
2013. The figure will then rise again to £10,000 in April 2014.
The move will lift two million people out of paying income tax all together.
In
total, from April next year the average worker earning under £100,000
will save £179 a year. By 2014 they will save £250 a year.
And
23 million basic rate taxpayers will take home an extra £346 a year
when the allowance rises to £9,205. They will then take home even more
when it increases again to £10,000.
At the same time George Osborne reduced the top rate of tax from 50p on incomes over £150,000 to 45p.
[h=2]Corporation tax and lending to business
[/h]Businesses large and small were
given welcome relief by the Chancellor today when he announced plans
to slash corporation tax in a bid to improve economic growth.
In an effort to show the world
Britain is open for business, George Osborne cut the amount of tax firms
pay on profits from 26 per cent to 24 per cent, double the reduction
previously announced.
The
cut will come into effect in April and Mr Osborne also spoke of his
intention to drop the rate further, to just 22p in the pound by the end
of his Government's term in office.
Small businesses will also
benefit from a greater supply of credit as Mr Osborne announced a £20bn
Government-backed loan scheme.
The much-trailed move to get banks lending to business is hoped to aid Britain's economic recovery.
From today, firms with a maximum turnover of £50m will be allowed to apply for the first £5bn of loans from banks including Royal Bank of Scotland, Barclays, Santander and Lloyds.
Small
business help was also offered in the simplification of the tax system
for firms with a turnover up to £77,000. Mr Osborne said tax returns
would be made on a cash-basis, 'dramatically simplifying' the process.
[h=2]No relief for drivers as Osborne refuses to freeze fuel duty
[/h]
George
Osborne refused to freeze or reduce the amount of tax motorists pay for
fuel and will instead press ahead with plans for a rise in duty.
Despite
pressure from hard-pressed motorists and businesses that rely on fuel,
such as hauliers, there will be a 3.02p per litre hike in fuel duty from
August.
The move sparks
fears that the country could see a repeat of fuel protests similar to
those seen in September 2000 when petrol pumps ran dry during a series
of rolling blockades on the country's motorway networks.
Some
motorists have also said they would have to change or quit their jobs
as a result of the rise in duty because of unaffordable travel costs.
Of
16,647 AA members polled, 4 per cent said they would change jobs to
reduce mileage while 3 per cent would have to abandon their job because
of unaffordable travel costs.
Skilled service and manual workers are most at risk, with 9per cent fearing for their employment as a result of the rise.
[h=2]Retirement age could rise to 70 or higher[/h]
Millions
of workers will be forced to delay their retirement until their 70s and
beyond under controversial plans announced by George Osborne today.
The Chancellor confirmed the Government will introduce a radical new link between the pension age and life expectancy.
Creating
an automatic trigger between longevity and the state pension age will
pave the way for the state pension age to hit 68 in 2026 - two decades
earlier than scheduled.
Office for National Statistics figures show that life expectancy is rocketing up by one year every four.
The
move will slash the eye-watering pensions bill, but elderly campaigners
last night accused the Chancellor of stealing retirement years from
millions who will be forced to work until they drop.
Mr
Osborne told MPs: Ive said we would consider proposals to manage
future increases in the state pension age beyond the increases already
announced.
I can confirm
today that there will be an automatic review of the state pension age to
ensure it keeps pace with increase in longevity.
Mr
Osborne first raised the prospect of a new system where higher life
expectancy would automatically trigger an increase in the State
pension age in the budget last year.
At
present, a man can retire on his 65th birthday and a woman can stop
work just after her 60th birthday. By 2020, both will retire at 66 under
reforms already announced.
[h=2]Pain for drinkers and smokers
[/h]
Drinkers and smokers faced added pain today as George Osborne confirmed another duty rise on alcohol and cigarettes.
The
Chancellor told the House of Commons that alcohol will be subject to a
rise in duty of 7.2 per cent that will see the price of a pint rising by
as much as 10p.
Cigarettes will also increase by five per cent above the rate of inflation, increasing the price of a packet by 37p.
Wine
and spirits will also be hit by the increase in alcohol duty. The
average bottle of wine will now rise to £5, according to industry
figures.
George Osborne told the House of Commons today that the increases would be effective from 2013.
He said: 'Smoking remains the biggest cause of preventable illness in this country.
'Duty
on a packet of cigarettes will rise by five per cent above the rate of
inflation. This will increase the cost of a packet of cigarettes by
37p.'
[h=2]
[/h][h=2]Planning law[/h]
More
than six decades of planning law are to be ripped up today as George
Osborne announced the Government is to publish a new planning document.
In
a move designed at helping to kick start the economy, protection
afforded to much of the countryside will be removed allowing for the
creation of new towns or 'garden cities'.
The
Government said that growth of the economy must be put ahead of
greenfield development objections and there are few concessions for
environmental groups.
David
Cameron last night said Britain would also be given another airport in
the South East, potentially in the Thames estuary, dubbed 'Boris Island'
because it has been heavily promoted by London Mayor Boris Johnson.
Accepting
there would be costs and protests, Mr Cameron shrugged off opposition
to the planning overhaul, saying he wants a Victorian-style blitz on
new infrastructure building to boost growth.
He warned that failure to act would condemn Britain to being a second-rate nation.
[h=2]Public sector pay freeze and spending cuts[/h]
Public sector workers living in the
poorest parts of Britain will have their pay frozen to help pay for
£2billion in spending cuts, it will be announced.
Millions could have their salaries frozen for years under radical plans to end the system of national pay bargaining.
Critics
have said the move will create an even bigger economic divide between
the north and south and plunge parts of the country already struggling
financially into an even deeper depression.
However,
the huge spending cuts that announced during today's budgets are
expected to bring a reduction in income tax for more than 20million
people.
Mr Osborne has
ordered officials to begin dismantling the decades-old national pay
system as part of a wider plan to boost Britains competitiveness.
In
a direct challenge to the unions, he told a dozen departments to
immediately start setting pay according to local living costs.
In some poorer parts of the country, public sector wages could be brought down by up to 18 per cent over time.
[h=2]Annual tax statement[/h]
Every taxpayer will receive a statement breaking down how much tax and National Insurance they have paid, Mr Osborne said.
He said it will show how much spent on interest payments on national debt each year.
[h=2]Support for our troops at home[/h]
The Chancellor today said £100million will be spent improving Army accommodation, in a boost for the armed services.
He also said thousands of soldiers will no longer have to pay council tax while deployed as the rate of relief is doubled.
In addition, the family welfare grant will be doubled.
Mr Osborne added that the cost of the Afghanistan mission until 2015 will be £2.4billion lower than previously forecast.
Five million pensioners take £260 a year hit in £3bn 'hidden' raid after tax allowances are changed
300,000 workers dragged into 40% bracket by lowering of income tax threshold - but move wasn't announced in Osborne's speech
Families see income tax threshold raised by £1,000 meaning extra £346 a year for basic rate taxpayers with 2m lifted out of income tax altogether
Corporation tax cut by 2% to 24% by April 1 and will drop further by 2014
Rise in stamp duty to 7% for homes worth over £2m
50p income tax rate is reduced to 45p and tax loopholes to be closed
Promises to hit rich for five times as much money each year and does not rule out Lib Dem's 'mansion tax' in the future
Climbdown over child benefit with threshold raised to £60,000
37p extra on price of a packet of 20 cigarettes as of 6pm tonight
Fuel duty to rise by 3p in August despite record petrol prices
Osborne announces review that could lead to retirement age rising above 70 much earlier than planned
George Osbornes Budget was swiftly
unravelling this afternoon as it emerged that the Chancellor has
launched a £3bilion tax raid on five million pensioners and dragged an
extra 300,000 workers into the 40p tax bracket.
Despite
his attempts to present the Budget as a Robin Hood tax raid on the
super-rich to help the poor, it soon emerged that the biggest money
spinner was a granny tax grab on half of the countrys pension
population.
Mr Osborne was
also facing a furious backlash after it emerged that 300,000 people will
be dragged into the 40 per cent rate of tax to help pay for a rise in
the income tax personal allowance announced in the Budget.
SCROLL DOWN FOR VIDEO
'Earn our way out': George Osborne today unveiled his Budget and promised help for struggling low and middle income earners
[h=2][/h]
In the red: Chancellor George Osborne leaves Number 11 Downing Street today on his way to Parliament to present the 2012 Budget
The decision was included in the
Budget document, but not announced by Chancellor George Osborne in his
speech to the House of Commons today.
Meanwhile,
Mr Osborne enraged motorist by ignoring calls to freeze a 3p per litre
fuel duty rise which will come into effect in August will also wipe out
the income tax gains for millions of workers who drive regularly.
The
triple whammy of controversial measures, which were glossed over during
the Budget, are set to penalise pensioners and workers on modest
incomes.
The most
politically explosive of Mr Osbornes announcements were his plans to
axe the higher income tax allowance enjoyed by around five million
elderly people.
Elderly
campaigners branded the move an outrageous assault on middle-class
pensioners and within hours of the announcement, the subject Granny
Tax was trending worldwide on Twitter.
The
tax grab, which critics warned had echoes of former Prime Minister
Gordon Browns stealth tax bombshells, means that from next year, people
turning 65 will no longer qualify for the higher rate of
£10,500-a-year.
Instead, they will continue to qualify for just a standard income tax allowance which was raised today to £9,205.
Individuals affected will pay an extra £260-a-year extra in tax more than they would have done.
Protesters: A police officer attempts to
disperse demonstrators who gathered near the Houses of Parliament to
protest against cuts to public services today
In a further assault, existing pensioners will have their tax allowance frozen at the £10,500 level indefinitely.
The Treasury have calculated the measures will raise £3.3billion over the next five years.
Meanwhile,
it has emerged that the amount that people can earn in a year before
they begin to pay higher rate 40 per cent tax will fall by £2,475 to
£41,450 in 2013.
Currently, workers can earn £42,475 before they begin to pay 40 per cent tax.
This means that an extra 300,000 basic rate taxpayers will end up being hit with a higher rate of tax.
Ahead
of todays announcements, aides of Mr Osborne had spun the Budget as a
tax-give away for millions of hard-working families and businesses paid
for by new taxes on the super-rich.
The
centrepiece was supposed to be plans to increase the tax-free personal
allowance to £9,205 lifting two million people out of paying tax
altogether and putting £346-a-year in the pockets of basic rate
taxpayers.
But within
minutes of sitting down, he was plunged into a row over a 'hidden'
£3billion tax raid on half the country's pensioners after changes to
their tax allowances.
In
another sting in the tail, Mr Osborne also announced plans for a rise in
the state pension age that could force millions of workers to delay
their retirement until their 70s much earlier than previously thought.
All in this together? Business Secretary Vince
Cable - who would be expected to sit near the Chancellor - watches the
Budget from the sidelines
Long day ahead: George Osborne at the gates of Downing Street this morning before he unveiled the Budget
Dr Ros Altmann, Director-General, Saga said: This is an outrageous assault on decent middle-class pensioners.
'This
Budget contains an enormous stealth tax for older people. Over the next
five years, pensioners with an income of between £10,000 and £24,000
will be paying an extra £3 billion in tax while richer pensioners are
left unaffected.
'There is
nothing in this Budget for savers, there is nothing to improve the
annuity market, nothing to appease the damage of quantitative easing and
nothing to support ISA changes and shelter older peoples money in
cash. This Budget is terrible news for pensioners.'
Dot
Gibson, general secretary of the National Pensioners Convention, said:
Many older people will feel they are being asked to forego their
reduction in tax to help out the super rich. Theres no fairness in
that.
[h=3]'MILLIONAIRES WILL PAY LESS': ANGER OF LABOUR'S MILIBAND[/h]Labour leader Ed Miliband tore into the Budget today after George Osborne announced plans to cut the top rate of income tax.
He told MPs: 'After todays Budget, millions will be paying more while millionaires pay less.'
The Chancellor used his Budget to announce that the 50p top rate of tax will drop to 45p from April next year.
In
his response to the statement, Mr Miliband told the Commons it marked
the end of the Governments claim that 'we are all in it together'.
In
a raucous Commons, Mr Miliband labelled it a 'millionaires Budget' and
said: 'The Chancellor spoke for an hour but one of his phrases was
missing.
'There was one thing he didnt say: today marks the end of "we are all in it together".'
Mr
Miliband said: 'A year ago the Chancellor said in his Budget speech,
"Now would not be the right time to remove the 50p tax rate when we are
asking others in our society on much lower incomes to make sacrifices."
'That
is exactly what he has done: tax credits cut, child benefit taken away,
fuel duty rising - and what has he chosen to make his priorities?
'For Britains millionaires, a massive income tax cut each and every year.'
Mr Osborne insisted that no pensioners will lose out in cash terms and that the move would help simplify the system.
However, Labour leader Ed Miliband said it amounted to a hidden tax rise on millions of pensioners.
Mr Osborne insisted that his Budget would earn its way in the world after he announced plans to slash corporation tax.
Meanwhile,
the Chancellor announced a new top rate of 7 per cent stamp duty on
£2million homes which comes into force at midnight tonight, together
with a crackdown on morally repugnant millionaire tax avoidance.
Mr
Osborne also left the door open for the Lib Dem's 'mansion tax' - an
annual levy on homes worth £2m or more - to come into force at a later
date by ordering a review into the idea.
An impassioned Mr Osborne told MPs: 'This country borrowed its way into trouble. Now it will earn its way out.'
In
a hugely controversial move, the Chancellor said the Government would
launch a review into introducing a radical new link between the pension
age and life expectancy which will report back by the summer.
Labour leader Ed Miliband tore into the Budget today after George Osborne announced plans to cut the top rate of income tax.
He told MPs: 'After todays Budget, millions will be paying more while millionaires pay less.'
The Chancellor used his Budget to announce that the 50p top rate of tax will drop to 45p from April next year.
In
his response to the statement, Mr Miliband told the Commons it marked
the end of the Governments claim that 'we are all in it together'.
Mr
Osborne also courted controversy by committing himself to lowering the
top 50p rate of tax to 45p after announcing it had had raised just a
third of £3billion it was expected to.
Plans: Prime Minister David Cameron this morning after a pre-Budget Cabinet meeting
The Chancellor said that other measures to hit the rich would take five times more from them that the 50p rate.
He said: No Chancellor can justify a tax rate that damages our economy and raises next to nothing.
'And
thanks to the other new taxes on the rich I have announced today, we
will be getting five times more money each and every year from the
wealthiest in our society.
Announcing a crackdown on multi-millionaires, he said: I regard tax evasion and aggressive tax avoidance as morally repugnant.
Other headline-grabbing moves included a 37p increase in cigarette duty which comes into effect tonight.
Just
hours before the Budget, Prime Minister David Cameron told the Cabinet:
This budget demonstrates our values helping working people and
boosting enterprise.
'We are sorting out the taxes that dont raise money and dragging things down while helping those at the bottom.
How the Budget will affect you: Allowances
over the next tax year - but graphic does not include 2013/14 when
pensioners will see a reduction in their allowance
[h=1]The major areas covered in the 2012 Budget[/h][h=2][/h][h=2]Stamp Duty hit for homes sold for more than £2m
[/h]
A tax grab on wealthy homebuyers almost all of them in London and the South East was unveiled in todays Budget.
In
an attempt to show that the rich will be squeezed when the 50p top rate
of income tax is lowered, George Osborne introduced a 7 per cent top
band for stamp duty on homes costing £2m or more.
It means a minimum tax contribution of £140,000 by someone buying a residential house costing £2m or more.
The move comes just 12 months after the introduction of a 5 per cent band on homes bought for more than £1m.
The
new rate will allow the Government to milk high-end wealth particularly
in expensive enclaves of London, appealing to 'squeezed middle' voters.
But
it will also avoid a costly general revaluation of homes across the
country that would have been required if the Lib Dem's 'mansion tax' or
annual levy was implemented.
[h=2]Child benefit cut-off raised
[/h]Families
receiving child benefit were offered some relief today when George
Osborne announced that the cut-off point will be £60,000.
The
Government had been keen on scrapping child benefit for any person
earning more than the £42,475 threshold for 40 per cent tax.
But the proposals were condemned by charities, women's groups and family campaigners.
Child benefit will now only be completely withdrawn when somebody earns £60,000.
It will be tapered off after £50,000 to avoid a 'cliff edge'.
The
Chancellor told the House of Commons today: 'Mr Deputy Speaker, in the
Spending Review, we took the difficult decision to remove child benefit
from families with a higher rate taxpayer.
'I
said then that I simply could not justify asking those earning £15,000
or £30,000 to go on paying Child Benefit to those earning £80,000 or
£100,000. And I stand by that principle.
[h=2]Income tax cut for 23m... and the super-rich
[/h]
Millions of workers will be hundreds of pounds a year better off when the income tax threshold is raised.
Some
23 millions basic rate taxpayers will see their personal allowance -
the amount they can earn before paying tax - rise to £9,205 from April
2013. The figure will then rise again to £10,000 in April 2014.
The move will lift two million people out of paying income tax all together.
In
total, from April next year the average worker earning under £100,000
will save £179 a year. By 2014 they will save £250 a year.
And
23 million basic rate taxpayers will take home an extra £346 a year
when the allowance rises to £9,205. They will then take home even more
when it increases again to £10,000.
At the same time George Osborne reduced the top rate of tax from 50p on incomes over £150,000 to 45p.
[h=2]Corporation tax and lending to business
[/h]Businesses large and small were
given welcome relief by the Chancellor today when he announced plans
to slash corporation tax in a bid to improve economic growth.
In an effort to show the world
Britain is open for business, George Osborne cut the amount of tax firms
pay on profits from 26 per cent to 24 per cent, double the reduction
previously announced.
The
cut will come into effect in April and Mr Osborne also spoke of his
intention to drop the rate further, to just 22p in the pound by the end
of his Government's term in office.
Small businesses will also
benefit from a greater supply of credit as Mr Osborne announced a £20bn
Government-backed loan scheme.
The much-trailed move to get banks lending to business is hoped to aid Britain's economic recovery.
From today, firms with a maximum turnover of £50m will be allowed to apply for the first £5bn of loans from banks including Royal Bank of Scotland, Barclays, Santander and Lloyds.
Small
business help was also offered in the simplification of the tax system
for firms with a turnover up to £77,000. Mr Osborne said tax returns
would be made on a cash-basis, 'dramatically simplifying' the process.
[h=2]No relief for drivers as Osborne refuses to freeze fuel duty
[/h]
George
Osborne refused to freeze or reduce the amount of tax motorists pay for
fuel and will instead press ahead with plans for a rise in duty.
Despite
pressure from hard-pressed motorists and businesses that rely on fuel,
such as hauliers, there will be a 3.02p per litre hike in fuel duty from
August.
The move sparks
fears that the country could see a repeat of fuel protests similar to
those seen in September 2000 when petrol pumps ran dry during a series
of rolling blockades on the country's motorway networks.
Some
motorists have also said they would have to change or quit their jobs
as a result of the rise in duty because of unaffordable travel costs.
Of
16,647 AA members polled, 4 per cent said they would change jobs to
reduce mileage while 3 per cent would have to abandon their job because
of unaffordable travel costs.
Skilled service and manual workers are most at risk, with 9per cent fearing for their employment as a result of the rise.
[h=2]Retirement age could rise to 70 or higher[/h]
Millions
of workers will be forced to delay their retirement until their 70s and
beyond under controversial plans announced by George Osborne today.
The Chancellor confirmed the Government will introduce a radical new link between the pension age and life expectancy.
Creating
an automatic trigger between longevity and the state pension age will
pave the way for the state pension age to hit 68 in 2026 - two decades
earlier than scheduled.
Office for National Statistics figures show that life expectancy is rocketing up by one year every four.
The
move will slash the eye-watering pensions bill, but elderly campaigners
last night accused the Chancellor of stealing retirement years from
millions who will be forced to work until they drop.
Mr
Osborne told MPs: Ive said we would consider proposals to manage
future increases in the state pension age beyond the increases already
announced.
I can confirm
today that there will be an automatic review of the state pension age to
ensure it keeps pace with increase in longevity.
Mr
Osborne first raised the prospect of a new system where higher life
expectancy would automatically trigger an increase in the State
pension age in the budget last year.
At
present, a man can retire on his 65th birthday and a woman can stop
work just after her 60th birthday. By 2020, both will retire at 66 under
reforms already announced.
[h=2]Pain for drinkers and smokers
[/h]
Drinkers and smokers faced added pain today as George Osborne confirmed another duty rise on alcohol and cigarettes.
The
Chancellor told the House of Commons that alcohol will be subject to a
rise in duty of 7.2 per cent that will see the price of a pint rising by
as much as 10p.
Cigarettes will also increase by five per cent above the rate of inflation, increasing the price of a packet by 37p.
Wine
and spirits will also be hit by the increase in alcohol duty. The
average bottle of wine will now rise to £5, according to industry
figures.
George Osborne told the House of Commons today that the increases would be effective from 2013.
He said: 'Smoking remains the biggest cause of preventable illness in this country.
'Duty
on a packet of cigarettes will rise by five per cent above the rate of
inflation. This will increase the cost of a packet of cigarettes by
37p.'
[h=2]
[/h][h=2]Planning law[/h]
More
than six decades of planning law are to be ripped up today as George
Osborne announced the Government is to publish a new planning document.
In
a move designed at helping to kick start the economy, protection
afforded to much of the countryside will be removed allowing for the
creation of new towns or 'garden cities'.
The
Government said that growth of the economy must be put ahead of
greenfield development objections and there are few concessions for
environmental groups.
David
Cameron last night said Britain would also be given another airport in
the South East, potentially in the Thames estuary, dubbed 'Boris Island'
because it has been heavily promoted by London Mayor Boris Johnson.
Accepting
there would be costs and protests, Mr Cameron shrugged off opposition
to the planning overhaul, saying he wants a Victorian-style blitz on
new infrastructure building to boost growth.
He warned that failure to act would condemn Britain to being a second-rate nation.
[h=2]Public sector pay freeze and spending cuts[/h]
Public sector workers living in the
poorest parts of Britain will have their pay frozen to help pay for
£2billion in spending cuts, it will be announced.
Millions could have their salaries frozen for years under radical plans to end the system of national pay bargaining.
Critics
have said the move will create an even bigger economic divide between
the north and south and plunge parts of the country already struggling
financially into an even deeper depression.
However,
the huge spending cuts that announced during today's budgets are
expected to bring a reduction in income tax for more than 20million
people.
Mr Osborne has
ordered officials to begin dismantling the decades-old national pay
system as part of a wider plan to boost Britains competitiveness.
In
a direct challenge to the unions, he told a dozen departments to
immediately start setting pay according to local living costs.
In some poorer parts of the country, public sector wages could be brought down by up to 18 per cent over time.
[h=2]Annual tax statement[/h]
Every taxpayer will receive a statement breaking down how much tax and National Insurance they have paid, Mr Osborne said.
He said it will show how much spent on interest payments on national debt each year.
[h=2]Support for our troops at home[/h]
The Chancellor today said £100million will be spent improving Army accommodation, in a boost for the armed services.
He also said thousands of soldiers will no longer have to pay council tax while deployed as the rate of relief is doubled.
In addition, the family welfare grant will be doubled.
Mr Osborne added that the cost of the Afghanistan mission until 2015 will be £2.4billion lower than previously forecast.
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