UK Budget... What to expect?
Scheduled for 12:30 GMT, this will be Chancellor George
Osborne’s eighth budget. Having set himself a target of achieving a surplus by
2019-20 , sluggish growth since November could mean more spending cuts and tax
rises. His statement comes with two months to go before the UK votes on its EU
membership. The government is campaigning to remain in the EU, and the
chancellor will be keen to avoid antagonizing either side in the debate with
his announcements.
WHAT WE ALREADY KNOW
A fresh round of government spending cuts
Osborne warned over the weekend that a slowdown in global
growth would lead to further fiscal tightening, saying he would use the Budget
to slash 50p in every £100 the government spends by the end of the decade, or
around £4bn, from the Treasury’s balance sheet.
More than £300m in funding for Crossrail 2 and HS3.
Osborne will use the Budget to commit to more than £300m in
new infrastructure spending, including £80m to fund the development of plans
for Crossrail 2 and £60m to draw up plans to introduce high-speed rail in the
north. In a major move for London transport, the chancellor will also say for
the first time that Crossrail 2 is a “priority scheme” and commit to introduce
a Crossrail 2 Bill by the end of the parliament.
A green light for driverless cars on Britain’s motorways
The chancellor is due to announce the first trials of
driverless cars on British motorways and vow to spend £15m creating a “Connected
Corridor” from London to Dover to help driverless cars communicate wirelessly
with existing infrastructure.
WHAT MIGHT HAPPEN
Another hike in the insurance premium tax (IPT)
The AA warned over the weekend that the chancellor is
considering raising the basic rate of insurance premium tax (IPT) from 9.5 per
cent to 12.5 per cent. Just last November, Osborne increased the basic rate of
IPT from 6 to 9.5 per cent – meaning that the stealth tax on more than 50m
motor, home, medical and pet insurance premiums could be set to double in less
than six months.
The first increase in fuel duty in five years
Osborne froze fuel duty in 2011, and given persistently low
oil prices and the large amount an increase in the tax could net for the
Treasury – an extra 2p of duty would bring in about £1bn – many believe the
chancellor may announce a rise in the Budget. But the move would prove
unpopular, with backbencher MPs from multiple parties opposing any increase.
An income tax break for middle and higher earners
Osborne is reportedly looking at increasing the amount
people have to earn before they start paying the higher 40p tax rate to
£43,000, from the current threshold of £42,385. The chancellor could also slash
the top rate of tax from 45p to 40p, which would benefit people earning more
than £150,000 a year.
Higher taxes on alcohol, tobacco and other vices
Brewers are betting on another 1p to be taken off beer duty,
but Osborne is said to be looking at increasing taxes on alcohol, as well as
imposing a minimum tax on cigarettes.
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