Chancellor George Osborne delivering his third budget speech on Wednesday said that his budget was “fiscally neutral” with “a modest reduction in both taxation and spending.”
Osborne believes that Britain is in need of a “simple and transparent” tax system which “businesses can easily navigate.” The key points outlined by the chancellor in his budget statement to the House of Commons focused on cutting the top 50 pence tax rate to 45 pence from April 2013. Osborne said: “No chancellor can justify a tax rate that damages our economy and raises next to nothing, it is as simple as that.”
In addition the personal tax allowance will increase to £9,205 in April 2013 in an attempt to “take low income earners out of tax altogether.” The threshold at which lower income earners begin paying income tax has therefore gone up £1,100 from its £8,105 level this April.
Moreover, Osborne will be reducing the corporate tax rate to 24 percent in April and down to 22 by 2014, making it one of the lowest corporation tax rates globally in an attempt to invite investment into Britain.
Osborne went on to say he will also be bringing in a new rate of stamp duty. From midnight on Wednesday a new seven percent stamp duty tax will be payable on properties over £2m.
Meanwhile, the chancellor told the Commons that the impact of the sovereign debt crisis has been significant but assured that the Office for Budget Responsibility (OBR) said that the country will avoid technical recession with positive growth in the first quarter of this year. The OBR also reassessed the growth forecast for 2012 from 0.7 percent up to 0.8 percent. Inflation is anticipated to drop from 2.8 percent in 2012 to 1.9 percent by 2013.