George Osborne has announced a round of tax cuts that work in favour of savers, workers and first-time home buyers, in what could be his last Budget announcement as chancellor.
With the general election looming in May this year, Mr Osborne said that Britain is now walking tall again after five years of austerity measures from the coalition government. He said that unemployment will reach a record low this year, while the trade deficit figures are at 15-year lows.
Growth in the UK economy’s growth also hit 2.6 per cent last year, which was faster than in any other advanced economy in the world, despite the fact it fell short of the three per cent target.
In the biggest Budget move, Mr Osborne promised that if the Conservatives should win the May election, he will offer savers their first £1,000 tax free. This would benefit the vast majority, with the government claiming that 95 per cent of savers across the UK would pay no tax on their savings.
He also promised changes for house buyers, with the government pledging to top up savings for first-time deposits to the tune of £50 for every £200 saved. This Help to Buy ISA will come into play in autumn, and will be a real positive for buyers.
Other moves made by the government today included the announcement that self-assessment tax returns are to be brought to an end and replaced by digital returns. Meanwhile, an additional relaxation on pension rules in 2016, following on from changes this April, will help five million people swap fixed annual payments for cash.
This could potentially see more money coming into property investment, with many pensioners seeing buy-to-let as an attractive alternative to traditional savings.
A crackdown on tax evasion across the board will also mean the UK manages to save some £3.1 billion moving forward.
Anna Bowes, director of independent savings advice site SavingChampion.co.uk, said: “The chancellor’s focus on savers continues and this time it covers everyone. We welcome any changes that bring some respite to savers and at first glance these will help the great majority of UK savers to benefit from tax-free income. Although it’s a small change for larger savers, it could be crucial for those relying on their savings to provide an income.”
However, the Labour party was less receptive, with opposition leader Ed Miliband saying that the gap between the chancellor and working class families has never been greater.