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Budget 2013: 10 key takeaways
by Wealth Manager Team on Mar 20, 2013 at 16:18
George Osborne promised to deliver a hard hitting Budget that tackled Britain's economic difficulties. Here are the 10 key takeaways from his closely followed speech.
OBR halves UK economic growth outlook to 0.6%
The Office for Budget Responsibility (OBR) has halved its expectations for UK economic growth. The OBR predicts 0.6% growth next year, down from the 1.2% it forecast at December's the Autumn Statement.
Osborne blamed a slowdown in global economic growth, pointing out the economic recovery in the US and Japan was flat in quarter four, while the eurozone contracted by 0.6%, hitting exports.
Osborne promised to 'go further' with monetary, fiscal and supply side reform to bolster the economy over the months ahead.Read more.
Earn £10,000 tax free by 2014
George Osborne confirmed a tax-free personal income allowance of £10,000 after promising to help 'hard workers'.
The change will come into force next year and at the same time Osborne said around two million people would be taken out of the tax system altogether.
The move towards the £10,000 allowance had initially been planned for the end of the parliament, however Osborne said it would be increased to £9,440 in two weeks, and by 2014 the allowance would be £10,000.Read more.
Billions to be clawed back as govt 'won't tolerate' tax abuse
The coalition warned it would 'not tolerate' tax avoidance as a range of aggressive anti abuse measures were unveiled.
George Osborne said HM Revenue & Customs (HMRC) had created a detailed offshore tax evasion strategy, and across the board its UK-US tax co-operation rules such as Fatca would be improved. In addition, there will be a continued crackdown on the transfer of assets abroad and between 2010 and 2015 an extra £994 million will de devoted to catching tax evaders.
Taking the lead, HMRC rolled out its offshore tax abuse strategy, committing to tougher penalties and better use of skilled individuals to spot abuse.Read more.
Help to Buy boost for home owners
Would-be homeowners and ‘second steppers’ trying to move up the housing ladder will both benefit under the government’s ‘Help to Buy’ scheme, announced in the Budget.
The initiative has been split in to two parts. The first part will see the government offer interest-free loans for a period of five years to people who buys new-build homes. The loans will be for 20% of the cost of the property, with the homeowner putting down a 5% deposit. The loan is repaid when the property is sold and is open to anyone, whether a first-time buyer or current homeowner, as long as the property is worth less than £600,000.
The second part of the scheme, which will be launched in January 2014 and run for three years, is £130 billion of ‘mortgage guarantees’ offered by the government.
Funds industry finally gets its Schedule 19 wish
The government will make the UK funds industry more competitive through a raft of measures.
It will do this by focusing on its offshore counterparts and by abolishing stamp duty on the sale of units in funds marketed in the UK.
The abolition of principal stamp duty reserve tax on surrenders of units in funds, known as Schedule 19, will be set out in the Finance Bill 2014, and take effect in tax year 2014-15.Read more.
Stamp duty on AIM stocks abolished
From next year the government is to abolish stamp duty on purchases of Alternative Investment Market (AIM) stocks in a move to ease the cost of funding for smaller businesses.
‘While other countries are launching transaction taxes, we are abolishing one,’ said Osborne, shortly after hailing Britain’s ‘world class’ asset management industry and pledging to support it.Read more.
Corporation tax to fall to 20% by 2015
Corporation tax will be reduced by a further 1%.
The rate will drop to 20% by April 2015, a change announced as part of a sweeping range of measures to support Britain's businesses.
It is not the first time the government has addressed corporation tax, as when the coalition came to power the rate fell from 28% to 21%.
No supply side reform for Bank of England policy
The government has appeared to row back on some of the more radical suggestions for change to the Bank of England’s Monetary Policy Committee remit, such as dual inflation and GDP targeting.
The appointment of Mark Carney as incoming Bank of England governor had been widely perceived as an occasion to change the Bank's 20-year-old policy framework – for instance following the US Federal Reserve's lead in including a secondary target based on growth or employment figures.Read more.
Osborne unveils £2k job tax cut
Osborne unveiled a £2,000 cut on national insurance for all businesses, describing the reduction as the 'largest tax cut in this Budget' and arguing the cost of employing people has been a burden for small firms for far too long.
'This is worth up to £2,000 for every business in the country. 450 smaller businesses and one third of all employers in this country will pay no jobs tax,' he said.Read more.
Bond fund witholding tax boost lined up
The government is considering removing the requirement to withhold tax on interest distributions on UK bond funds to non-UK investors as part of a wider move to make the UK asset management industry more competitive.
According to the Budget statement, the government is consulting on a proposal to remove the requirement to withhold tax on interest distributions on UK domiciled bond funds when sold via intermediaries and marketed only to non-UK investors.
The move could provide a boost to the UK fund management industry when promoting their bond fund ranges abroad.Read more.