George Osborne delivered his final Budget this parliament. Photo: Getty
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What was announced in the Budget 2015?

George Osborne announced his final Budget of this parliament. What was in it?

Read the New Statesman team's analysis of the Chancellor's last Budget before the election:


And here's what George Osborne announced:

ISA and a slice

New fully flexible ISAs, giving you complete freedom to take money out, and put it back in later in the year, without losing any tax-free entitlement.

A Help to Buy ISA: for every £200 first-time buyers save for their deposit, the government will top it up with £50 more.


Personal savings allowance

A move coming in next April for the first £1,000 of interest earned on savings to be tax-free – it would apparently take 95 per cent of taxpayers out of savings tax altogether.


Income tax allowance rise

The income tax threshold will go up to £10,800 in 2016 and then to £11,000 in 2017.

The threshold at which people start paying the top rate of tax will rise above inflation to £43,300 by 2017/18. This is the first time in seven years this hasn’t just risen with inflation.


The road back from Wigan Pier

George Osborne, clearly trying to rebuff Labour’s attack that Tory cuts would take us back to Thirties spending levels, changed his tune. He announced that the public spending squeeze projected in his Autumn Statement last year will end a year early.

This would see national income as a percentage of GDP reach the same level as 2000, rather than the Thirties; Osborne’s target for a surplus has gone down from £23bn by 2020 to £5-7bn.


Give and take for pensioners

The government is to reduce from £1.25m to £1m the lifetime pension allowance that tax relief can be claimed on.

Pensioners will be allowed their annuities, without having to pay punitive tax charges of at least 55 per cent.

Allow police and firefighter widows to remarry without facing a pension penalty.


Google tax

Osborne claimed that all the new measures against tax avoidance and evasion will raise £3.1bn over the forecast period. He also announced a review into deeds of variation as an inheritance tax loophole.


Reducing national debt

The Chancellor announced new OBR statistics suggesting that national debt as a proportion of GDP is falling this year, a year earlier than predicted.

He said the “central judgement of this Budget” is that resources from the bank sales, lower interest payments, and lower welfare bills will be used to pay down the national debt.


Growth is up

The Chancellor announced that the OBR has revised up its forecast for GDP growth this year, from 2.4 per cent to 2.5 per cent.


Energy expenditure

Cuts in taxes on the North Sea oil industry, which amount to £1.3bn.

“Giving more power to Wales”: the government is working on a Cardiff city deal and opening negotiations on the Swansea Bay Tidal Lagoon subsidy levels.


Student support

Additional financial support, following Autumn Statement announcement for postgraduates, for PhDs and research-based Masters degrees. Loans up to £25,000 will be available for them.


Confirming Lib Dem mental health reforms

Funding for a major expansion of mental health services for children and those suffering from maternal mental illness.


100 per cent business rate growth to be kept for Manchester Combined, Cambridge and surrounding councils. Other councils are welcome to approach the Treasury to secure a similar deal.


Out with the tax returns

Online tax accounts will be launched, ending the use of paper tax returns.


A new pound

A 12-sided pound coin is unveiled, to avoid counterfeit. It has a prominent thistle on it.


Trumpeting creative funding

New tax credit for orchestras.

More generous TV and film tax credits.

Expansion of support for the video games industry.

A new horse race betting right to support British racing.

A consultation into tax support for local papers.


The Internet of Things

Investing in the “information revolution”, connecting up everything from urban transport to medical devices to household appliances.


Drinks on me!

Cutting beer duty by 1p.

Cider duty down by 2 per cent.

Scotch whisky and spirits down by 2 per cent.

Wine duty frozen.


But don’t drink and drive

Cancelling the fuel duty increase scheduled for September.



A new rail franchise for the southwest, with £7bn of investment in roads and air links.

Expanding broadband vouchers to more cities, committing to a national ambition to 100 megabits per second to nearly all homes.

Confirming first twenty housing zones, and creating eight enterprise zones.


Charity fundraiser

Libor fines will contribute a further £75m to charities for the armed services, including a memorial for Afghanistan veterans. There will also be £1m put aside to celebrate the 600th anniversary of Agincourt. £25m will be provided to help the UK’s eldest veterans, including nuclear test veterans.

Charities will be able to claim automatic Gift Aid on the first £8,000 of small donations, up from £5,000.


A call to farms

Farmers will be allowed to average out their income over five years for tax purposes.


Fixing the roof

Trebling funding for church roof appeals.

Anoosh Chakelian is deputy web editor at the New Statesman.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.