The Budget 2016 – as it happened


• “In this Budget… we choose to put the next generation first”

• “A Budget for working people”

• “A Budget that gets investors investing, savers saving, and businesses doing business”

The economy

• The UK economy is set to grow faster than any other major economy

• The outlook for  the global economy is weak

• GDP to grow by 2% in 2016, 2.2% in 2017, 2.1% in 2018, 2.1% in 2019 and 2.1% in 2020

• 0.7% inflation forecast this year, 1.6% next year

• Public spending to fall to 36.9% of GDP by the end of the decade

• Deficit to fall to 2.9% of national income in 2016/17 and 1.9% in 2017/18

Personal taxation

• Income tax personal allowance rises to £11,500 from April 2017

• Higher rate threshold rises to £45,000 from April 2017

• Capital gains tax (CGT) down to 20% for higher-rate taxpayers and 10% for basic-rate taxpayers from April 2016

• Old CGT rates of 28% and 18% retained for gains on residential property and ‘carried interest’

• 10% CGT rate on long-term external investment in unlisted companies up to £10 million lifetime gains

• ISA limit up to £20,000 in 2017

• Lifetime ISA from 2017 for under 40s, with government bonus of 25% - for first home or retirement

• Action against disguised remuneration schemes

Business taxes

• Corporation tax rate down to 17% by April 2020

• A road map to be published, to make business taxation ‘fit for the future’

• Restrictions on interest deduction for multinationals

• Withholding tax on royalties to be strengthened

• Relief for brought-forward losses limited to 50% of profits, where profits over £5 million

• Two new tax-free allowances of £1,000 each for trading and property income

• Class 2 national insurance contributions abolished from 2018

• Loans to participators to be taxed at 32.5%

• Business rate reductions for small companies

• Business rates to be uprated by CPI, not RPI

• Stamp duty land tax on commercial property moves to ‘slice’ system, reducing the charge on 90% of commercial purchases

• Petroleum revenue tax effectively abolished

• Oil and gas corporation tax supplementary charge halved to 10%

• Insurance premium tax up by 0.5% to fund flood defences

• New sugar levy on soft drinks industry from 2018, to finance sport in schools

Excise duties

• Fuel duty frozen for the sixth year in a row, saving a typical motorist £75 a year

• Tobacco duty to rise by 2% above inflation (3% for hand-rolling tobacco)

• Beer duty and cider duty frozen

• Duty on spirits frozen

• Other alcohol duties rise by inflation

Spending decisions

• Business rates to be retained by Greater London Authority

• London Crossrail 2 to be commissioned

• Go-ahead for High Speed 3 rail link between Manchester and Leeds

• All schools to become academies by 2020