[Oliver Price | News Manager]
George Osborne, The Chancellor of the Exchequer, has recently announced his second budget of this Conservative government. Not everything in the budget is directly relevant to students, so Trident Media have collated the most important facts about the budget that relate to student life.
Jamie Oliver will surely be pleased with this legislation as he has been campaigning for this for a very long time. The government has decided to implement a levy on soft drinks that contain added sugar. There will be two rates of tax, one for drinks with more than five grams of sugar per 100 millilitres and a higher rate for drinks with more than eight grams of sugar per 100 millilitres. This legislation will be formally implemented in April 2018.
The “sugar tax” was welcomed by Jeremy Corbyn, leader of the Labour opposition.
Starting April 2017, any adult under 40 years of age can open a new type of ISA (Individual Savings Account) – a “Lifetime ISA”.
These ISAs will allow you to save up to £4,000 each year, while receiving a government bonus of 25 per cent, up to £1,000 a year, until you are 50 years old. This money can be used to buy your first home, worth up to £450,000, or be saved and then withdrawn when you are 60. If you do not use the saved money for either of these purposes, then you will lose the government bonus.
Income tax cuts
The personal allowance – the amount of money you earn income tax-free – currently stands at £10,600. This will be increased to £11,500 in April 2017.
The point at which you will pay the higher rate of income tax (forty per cent) will change from the current £42,385 to £43,000 in 2016, and £45,000 in April 2017.
Corporation tax cuts
Corporation tax will be cut from 20 per cent, already the lowest in the G20, to 17 per cent in 2020. This means that the government, at least in the short term, will have less money to pay for government spending; however the theory is that lower taxes will attract more business to Britain. Whether you agree with this is down to your personal beliefs.
Freezing beer and fuel duty
The duty rates (extra tax) on beer, spirits and ciders will be frozen this year. This means that these drinks will not be subject to an increase in tax.
Fuel duty will also be frozen in 2016-17, which will save a typical motorist £75 a year. This is the sixth consecutive year that fuel duty has been frozen.
Cuts to disability benefits
Personal Independence Payments (PIP), a benefit paid out to disabled people so they can live independently (for example paying for care nurses or maintenance of special equipment), is being cut by £1.3 billion. These cuts come soon after cuts to Employment Support Allowance (ESA), a benefit which helps disabled people with basic living costs such as food, by around £30 a week per claimant.
However, at the time of publication, the Chancellor, Conservative George Osborne, has done a total U-turn on the cuts after the recent resignation of now ex-Department for Work and Pensions Secretary, Iain Duncan Smith, and pressure from the leader of the Labour opposition, Jeremy Corbyn.
The BBC has reported that Number 10 has stressed that PIP will still have to be reformed in the future as the cost is “unsustainable.”
With what is looking to be another controversial budget, and the second budget in a row where the Chancellor has taken an embarrassing U-turn, this could be a big blow the credibility of both Osborne and the Conservatives.
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