Now that the dust has settled we can see a Budget that gave a bit to everyone, without giving a lot to anyone.
The good news for individuals and families, when it came against a backdrop of wider economic gloom, was largely in the form of exemptions, reliefs and timetables brought forward, including the £10,000 personal allowance before people pay any tax at all. It now arrives in 2014, a year earlier than planned.
This will help people on low incomes, as will the cancellation of September’s 3p a litre fuel duty rise. The single flat pension of £144 a week has also been brought forward a year to 2016.
The Chancellor seems to have listened to warnings that the ‘Bank of Mum and Dad’ is running out of money to help people get on the housing ladder, which is a particularly painful experience in London.
The ‘Help to Buy’ scheme announced by George Osborne, with its deliberate echoes of the ‘Right to Buy’ flagship policy of Margaret Thatcher, will give interest loans of up to 20 per cent of the value of new-build homes worth up to £600,000. The buyer will contribute five per cent. This should particularly help young people, but also the construction industry and therefore the wider economy.
The Government will also offer “mortgage guarantees” on any homes, new or old, to lenders under a scheme that will start next year and run for three years. It will apply to lenders that offer mortgages to people with deposits of between five per cent and 20 per cent.
He confirmed the help for families struggling with childcare costs, a ballooning bill for many, announced earlier this week. From 2015 there will be 20 per cent tax relief on child care costs up to £6,000 per child a year.
Small and medium sized businesses were clearly on the Chancellor’s mind, with some useful tax breaks announced. There will be relief from Capital Gains Tax where a firm is sold to its employees. There might have been disappointment that business rates, a big headache for many firms, were not addressed, but corporation tax was in his sights. It will come down from 21 per cent to 20 per cent in 2015.
But the real meat was a new employment allowance which will cut National Insurance bills by £2,000 for every firm. This is helpful. Employers National Insurance Contributions are a payroll tax in all but name, and high at 13.8 per cent. The opportunity to extend a loan to an employee of up to £10,000 without that attracting tax will also be welcomed.
The Chancellor said his Budget would be ‘fiscally neutral’, which is a fancy way of saying that what he gave away with one hand had to be clawed back with the other. His focus remains on reducing the deficit. But there was still cause for some cheer, signs that he does want to kick-start growth, too. That is worth raising a glass to in these difficult times, perhaps of beer. That, at least, should now be about one penny a pint cheaper from Sunday.
Mike Parkinson is a partner in accountancy firm Barnes Roffe.