Mr Deputy Speaker, last year’s emergency Budget was about rescuing the nation’s finances, and paying for the mistakes of the past. Today’s Budget is about reforming the nation’s economy, so that we have enduring growth and jobs in the future. And it’s about doing what we can to help families with the cost of living and the high oil price.
The UK is set for the return and major expansion of buy-to-let in the housing market after plans were unveiled for tax cuts on bulk purchases of residential properties. The Coalition has identified buy-to-let as a way of solving Britain’s housing shortage and wants to attract investment into residential property by major institutions, such as pension funds, and landlords.
National Savings & Investments (NS&I) is to relaunch index-linked savings certificates pegged to the retail prices index (RPI). NS&I withdrew the certificates last July after they became over subscribed. Currently they are only open to clients who have certificates that are maturing.
Employees could see their retirement pushed back at least 12 months every two years after the Chancellor, George Osborne announced plans to link the pension age to rising longevity. The Chancellor announced a mechanism to raise the state retirement age automatically in line with life expectancy. The pension age is already due to increase to 66 by 2020.
Fuel duty
The planned rise in fuel duty, expected to add 5p to a litre of petrol from 6th April 2011, was postponed and instead the Chancellor announced a 1p reduction. Individuals and small businesses will find this helpful although it seems contrary to the commitment to increase environmental taxes. But fuel duty is already significantly in excess of other fuel taxes in terms of the price it places on carbon dioxide emissions.
There was also encouragement to help small companies raise finance, with the Chancellor proposing a significant increase to the venture capital tax reliefs, by increasing the tax relief available, and raising some of the size limits for qualifying companies. The increase in the maximum amount an individual can invest in a qualifying Enterprise Investment Scheme (EIS) company, has been doubled from £500,000 to £1m, and should be particularly helpful to companies raising funds from business angel investors.
Measures to encourage charitable giving will be of interest to both the voluntary sector and those who donate to charity. The reduction from 40% to 36% in the rate of Inheritance Tax (IHT) applicable from 6th April 2012, where 10% or more of a deceased’s net estate is left to charity should provide additional incentives for substantial charitable legacies.
Corporation Tax rates
The main rate of Corporation Tax reduced from 28% to 26% from 1st April 2011, with a subsequent reduction in each of the following three years so that the rate from 1st April 2014 will be 23%. This represents an additional 1% reduction in the proposed Corporation Tax rates announced in the emergency Budget in June 2010.
Savers
There were few measures announced to help prudent savers, struggling to protect their money against low interest rates and rising inflation. The Chancellor indicated that inflation, as measured by the Consumer Price Index, is likely to remain between 4% and 5% for the rest of 2011.
First-time buyers
First time buyers are to receive aid from the Government to the value of £250m. Under a scheme called Firstbuy Direct, 10,000 individuals will be helped to get on the housing ladder, filling the gap in the market left by Labour’s Homebuy Direct initiative, which ended last year.