Budget key points: At-a-glance
- Published
Here are the key points of Chancellor George Osborne's first Budget, delivered on 22 June, 2010:
TAX
VAT: Rate will rise from 17.5% to 20% from January 4, 2011.
Personal income tax allowance: To be increased by £1,000 in April to £7,475 - worth £170 a year to basic rate taxpayers. It is expected that 880,000 of the lowest-paid will be taken out of income tax altogether.
Council tax: Could be frozen for one year from April 2011 in England, but extra funds will only be offered to councils which keep their own costs down. Worth about £35 per household.
Capital Gains Tax: To rise from 18% to 28% from midnight for higher rate taxpayers. The "entrepreneurs relief" rate of 10% on the first £2m of gains will be extended to the first £5m.
A 50p a month "landline tax" to fund the rollout of fast broadband will be scrapped - instead the government will support private investment, partly funded by the digital switchover under-spend within the TV licence fee.
The balance of spending cuts to tax rises would be 77% to 23%.
WATCH: Chancellor announces changes to capital gains, external
CIGARETTES, ALCOHOL AND FUEL
No increases this time round. Labour's plan to increase the duty on cider by 10% above inflation will be scrapped from July.
BENEFITS
Child benefit: Frozen for the next three years.
Tax credits: Reduced for families earning over £40,000 next year. But low income families will get more Child Tax Credit - the amount per child will rise by £150 above the rate of inflation next year - at an annual cost of £2bn.
Housing benefit: New maximum limit of £400 a week for properties with more than three bedrooms, £250 a week for a one-bedroom flat, £290 for a two-bedroom property and £340 for a three-bed property, to save £1.8bn a year by the end of the Parliament.
Unemployed people will see their Housing Benefit cut by 10%, after 12 months of claiming Jobseekers Allowance from April 2013.
It will also be cut for people of working age who are in larger homes than their family size warrants but, from April 2011, disabled claimants who do not have a resident carer will be able to claim for an extra bedroom.
Health in pregnancy grant to be abolished from April 2011, the Sure Start maternity grant will be restricted to the first child.
Lone parents will be expected to look for work when their youngest child goes to school.
Excluding the state pension and pension credit, from 2011 benefits, tax credits and public service pensions will rise in line with the Consumer Price Index, rather than the, generally higher, Retail Price Index, saving over £6 billion a year by the end of the Parliament.
The government will introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.
The welfare shake-up will save £11bn by 2014/15.
PUBLIC SECTOR PAY
Public sector workers face a two-year pay freeze if they earn over £21,000. Those earning less £21,000 will get a flat pay-rise worth £250 in both years.
Armed services personnel in Afghanistan will see their operational allowance doubled to £4,800 - as announced by David Cameron two weeks ago.
PENSIONS
The basic state pension will be linked to earnings from April 2011, with the pension guaranteed to rise in line with earnings, prices or 2.5%, whichever is the greater.
The government will accelerate the increase in state pension age to 66 - a "call for evidence" will be made later this week.
The government will also consult on phasing out the default retirement age - to ensure those who want to work past 65 are able to do so.
Former Labour Work and Pensions Secretary John Hutton to review public sector pensions, ahead of the autumn spending review.
BUSINESS
From April 2011, the threshold at which employers start to pay National Insurance will rise by the rate of inflation plus £21 per week.
Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years, until it reaches 24%.
The small companies' tax rate will be cut to 20%.
Tax relief for the video games industry will be scrapped.
WATCH: Chancellor George Osborne cuts corporation tax, external
BANKS
A bank levy will be introduced, which will apply to the balance sheets of UK banks and building societies and the UK operations of foreign banks from January 2011. But smaller banks will not have to pay. It is expected to raise over £2bn a year.
ENVIRONMENT
The government will "explore changes to the aviation tax system" such as switching from a per-passenger to a per-plane levy. It will consult on major changes.
Government looking at reforming the climate change levy "to provide more certainty and support to the carbon price". Proposals to be published in the autumn.
The Office for Budget Responsibility will assess the effect of oil price fluctuations on the public finances over the summer, before the government looks at options for a "fair fuel stabiliser" - which would see fuel duty fall when prices go up, and vice versa.
Case for rural fuel duty discount is under consideration.
REGIONS
White Paper to be published on tackling regional economic differences in Britain later in the summer, followed by a paper on rebalancing the economy of Northern Ireland.
The upgrade of the Tyne and Wear Metro, extension of the Manchester Metrolink, redevelopment of Birmingham New Street station and improvements to the rail lines to Sheffield and between Liverpool and Leeds will go ahead.
A Regional Growth Fund will be created to help fund regional capital projects over two years.
People setting up new businesses outside London, the South East and the east of England will be exempt from £5,000 of National Insurance payments for the first 10 workers.
UK ECONOMY
Growth forecast revised down from 2.6% to 2.3% in 2011.
The economy is predicted to grow by 1.2 % this year, 2.3% next year, 2.8% in 2012, 2.9% in 2013 and 2.7% in both 2014 and in 2015.
Debt to peak in 2013/14 at 70% of GDP.
Unemployment is forecast to peak this year at 8.1% and then fall for each of the next four years, to reach 6.1% in 2015.
Consumer price inflation is expected to reach 2.7% by the end of 2010 before "returning to target in the medium term". The inflation target remains at 2%, as measured by the Consumer Prices Index.
The UK is set to miss the previous government's "golden rule" - of borrowing only to invest over the economic cycle - in the current cycle by £485bn.
WATCH: Cuts and taxes will 'balance books' by 2016, external
BORROWING
Underlying current budget deficit should be "in balance" by 2015/16.
Public sector net borrowing will be £149bn this year, £116bn next year, £89bn in 2012-13 and £60bn in 2013-14.
By 2014-15 borrowing to reach £37bn, falling to £20bn in 2015-16.
SPENDING
Mr Osborne said the state now accounted for "almost half" of all national income which was "completely unsustainable".
Average real terms budget cuts of 25% over four years - except for health and international aid. Departmental cuts amount to a further £17bn by 2014-15, on top of those already planned.
But current expenditure to rise from £637bn in 2010-11 to £711bn in 2015-16 - partly due to rising debt interest payments.
No further reductions in capital spending totals but there will be "careful choices" about how the money was spent. Projects with "a significant economic return to the country" would be prioritised.