Unsurprisingly, this was less of a Budget and more of a Party Political Broadcast, with just seven weeks to go until the General Election. The Chancellor led with the fact that, in the last year, Britain grew faster than any other major advanced economy in the world.
The Office for Budget Responsibility has revised its growth forecast upwards from 2.4% to 2.5% for the current year and from 2.2% to 2.3% for 2016. The deficit has fallen by half since this government came into power and a surplus is predicted by 2018/19, which, if achieved, will be the first surplus in 18 years.
Borrowing has reduced from £150bn when they came to power, to £90.2bn, which is £1bn less than originally predicted. On jobs, Britain now has its highest rate of employment in its history. I could go on (the Chancellor certainly did!).
There were pledges of public spending in various areas, including superfast broadband, military and blood bike charities, transport in the northern powerhouse, science and innovation, films and video gaming, orchestras and a new horse race betting right (whatever that means!)
Tax was very much second fiddle to the positive economic news, but there were a few announcements.
The personal allowance is, as previously announced, to increase to £10,600 in April 2015, rising to £10,800 in 2016 and £11,000 in 2017. The higher rate threshold is also to increase, for the first time in seven years, by more than inflation, which equates to £915 by 2017. If the government is re-elected they have made a commitment to raise the personal allowance to £12,500 and the threshold before paying higher rate tax to £50,000
Pensions may be getting more flexible, but the lifetime limit dropped again, this time to £1m from the current £1.25m. On the plus side, Mr Osborne announced this would be index linked from 2018.
Tax avoidance was highlighted, as is standard, with the Chancellor introducing more anti-avoidance measures, larger penalties for “serial avoiders” and more Accelerated Payment Notices.
Entrepreneurs’ Relief has been targeted again, this time to tighten the rules as to when an asset used in a business qualifies, and also to ensure individuals hold a 5% share directly in a trading company.
ISAs are to become more flexible, allowing individuals to withdraw and reintroduce in the same tax year, without a loss of tax exempt status, whilst a new Help to Buy ISA is to be introduced, allowing individuals to save £12,000, to which the government will add £3,000, to enable people to get on the housing ladder.
A personal savings allowance is being introduced, for basic and higher rate taxpayers (not additional rate taxpayers) allowing £1,000 and £500 respectively to be received in interest, tax free, encouraging saving.
A day late for St Patrick’s Day, but beer duty was cut by 1%, cider and spirits duty by 2%, although wine duty was frozen. Fuel duty was also frozen for another year, the longest duty freeze in over 20 years.
Corporation tax, as already known, is to reduce to 20% from 1 April 2015.
Then came the bombshell, the Chancellor announced that the tax return would be “abolished altogether”. A new, online system is to be introduced allowing individuals to manage their own tax affairs, and upload their own information.
Given the significantly under-resourced HMRC and their ability to make frequent errors, you have to question the sense of this move (and that’s not bitterness coming from a tax adviser!), but there will be a consultation with the aim being to achieve this transition by 2020. I think this is definitely a “watch this space” announcement.
In what was his longest Budget speech, there was a lot of talk, but little substance. Will it be enough come Election day on 7 May? Will he still be Chancellor on the 8th? Time will tell, but I’m sure he’s lost a lot of support from accountants!