The Chancellor of the Exchequer, George Osborne, will deliver the next Budget on Wednesday 16th March 2016.
The annual speech sets out the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility (OBR) plus tax change proposals for the following financial year.
It will be Osborne’s seventh Budget. Since the Conservative victory in the general election in May the Chancellor has delivered an emergency summer Budget on 8th July and Autumn Statement on 25th November.
Help to Save
The Prime Minister has announced a new Help to Save scheme designed to encourage those on low incomes to kick-start their savings habit, which will launch from April 2018.
The accounts will be available to up to 3.5 million workers in receipt of Universal Credit or Working Tax Credits and will pay a government-backed bonus of up to £1,200 over four years.
Those able to save up to £50 a month, will get a 50% bonus after two years, worth up to £600. Account holders can choose to continue saving under the scheme for another two years to claim the remaining £600 set aside by the government.
Public spending cuts
The Chancellor has warned that weaker than expected growth and turbulence in global markets will lead to deeper cuts in public spending in the Budget.
Speaking on the Andrew Marr Show over the weekend the Chancellor revealed the cuts would amount to £4 billion which was the ‘equivalent to 50p in every £100’ of public spending by 2020, which he claimed ‘was not a huge amount in the scheme of things.’
However, the Chancellor would not reveal where the axe would fall.
"My message in this Budget is that the world is a more uncertain place than at any time since the financial crisis and we need to act now so we don't pay later," he said.
"That is why I need to find additional savings equivalent to 50p in every £100 the government spends by the end of the decade, because we've got to live within our means to stay secure. That's the way we make Britain fit for the future."
The Chancellor is expected to announce plans to force all schools in England to become academies by 2022.
He is also expected to announce an extra £1.5 billion in funding for education over this Parliament and longer days for schools to help working parents.
National Minimum Wage
It's already been announced that the National Minimum Wage for workers over 25 will be £7.20 from April- equivalent to a pay rise of at least £900 a year.
The Prime Minister also revelaed that 21- to 24-year-olds on the minimum wage would also be better off, with a rise of 3.7% to £6.95 an hour – equivalent to an extra £450 a year.
Minimum wage thresholds for other age groups were also set out as follows:
- 18- to 20-year-olds will see their minimum wage rise by 4.7% to £5.55 an hour
- The minimum wage for 16- to 17-year-olds will rise by 3.4% to £4.00 an hour
- Apprentices will see their wage rise by 3% to £3.40 an hour
The rises will take effect from October 2016.
It was widely expected that the Chancellor would change the rules on pensions tax relief in some way, either by cutting it down for higher-paid workers or removing it altogether but allowing people to withdraw all of their pensions tax free on their retirement.
At the moment, the tax relief increases in line with your Income Tax bracket. So normal rate taxpayers get a 20% bump from the Government on their contributions, while higher and additional rate taxpayers enjoy boosts of 40% and 45% respectively.
But the BBC reports that a Treasury source said that it was "not the right time" to make further changes to pension tax relief, following recent major changes that allow people to withdraw all of their pensions.
However, that doesn't mean pensions will be entirely free of reform in the Budget. Hargreaves Lansdown has pointed out there are still a number of options open to the Chancellor, including trimming the annual or lifetime allowances, or even restricting the use of salary sacrifice to pay into pensions.
In January the Government said it wanted suggestions from the general public about what they want to be included in the next Budget.
The poll is now closed but it will be interesting to see if the Chancellor references anything put forward.
We will regularly update this piece as more information comes out.
Picture by: PA / PA Wire/Press Association Images