George Osborne 0480am

George Osborne is set to announce 2011's Budget against a backdrop of inflation and global unrest. Image by altogetherfool via Flickr

The key points from George Osborne’s 2011 Budget and how they will affect your finances.

The economy

  • The growth forecast is down from 2.1% to 1.7% in 2011 and 2.6% to 2.5% in 2012.
  • The Office for Budget Responsibility (OBR) expects inflation to remain at 4-5% percent in 2011, but return to 2% by 2013.

Tax

  • 43 tax reliefs will be abolished.
  • The 50% tax rate will be reviewed.
  • There will be a consultation on the merging of National Insurance and Income Tax to try to simplify the tax system.
  • There will be a new measures to prevent tax avoidance.
  • Council Tax to be frozen or reduced.
  • From April 2012 the personal tax allowance will increase to £8,105, from £7,475.

Housing

  • There will be a £250 million commitment to help 10,000 first-time buyers buy new-build homes. This will be funded  by the bank levy.

Water

  • There will be public money to help people in the south-west with their water bills.

Energy

  • There will be incentives for investment in green energy, including an extra £2 billion for the Green Investment Bank and the UK will be the first country to introduce a carbon price floor for the energy industry.

Pensions

  • George Osborne would like to see a ‘single tier pension’ and there is a long-term aim to get to a £140 a week flat-rate state pension.

Pay

  • Public servants earning under £21,000 will get a ‘pay lift’ of £500.

Alcohol, tobacco and fuel duties

  • Tobacco duty to rise by 2% above inflation from 6pm tonight.
  • The tax on strong beer is to be increased, but the tax on low-alcohol beer will decrease, but there will be no additional changes.
  • The planned fuel duty increase of 1p above inflation is being scrapped, and fuel duty will be cut by 1p per litre from 6pm tonight.

Small business

  • From April 2011 Corporation Tax will be reduced by 2%.
  • There will efforts to reduce the weight of regulations on businesses – £350m of business regulation will be scrapped and there will be no new regulation on firms with fewer than 10 staff for three years.
  • 15% increase in credit for small businesses.
  • Business rate relief extended to October 2012.
  • From April 2011 Income Tax relief  will increase to 30%.
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