Budget: What it will mean for you

Chancellor of the Exchequer George Osborne outside No 11 Downing Street, London. Photo: Yui Mok/PA Wire

Chancellor of the Exchequer George Osborne outside No 11 Downing Street, London. Photo: Yui Mok/PA Wire

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Chancellor George Osborne’s emergency budget, the first by a Conservative-only government for nearly 20 years, was used to declare “Britain deserves a pay rise”.

Hailing a new “higher wage, lower tax, lower welfare” Britain, the chancellor said, from next April, everyone over 25 would be entitled to £7.20 an hour - and the figure would rise to £9 by 2020.

Some six million people will see their pay increase as a result - and those currently earning the minimum wage of £6.50 an hour will be £5,000 better off by 2020, he claimed.

Mr Osborne said he was following the Conservative tradition as the party that brought in protections for mill workers during the industrial revolution.

“Taken together with all the welfare savings and the tax cuts in this Budget, it means a typical family where someone is working full-time on the minimum wage will be better off,” Mr Osborne told MPs on Wednesday.

But acting Labour leader Harriet Harman responded by claiming the Budget was “making working people worse off” by cutting tax credits for the low paid and grants for students from poorer backgrounds.

Taken together with all the welfare savings and the tax cuts in this Budget, it means a typical family where someone is working full-time on the minimum wage will be better off

Chancellor George Osborne

How will this budget affect you?

Here are the main points:

New National Living Wage for over-25s, starting at £7.20 from April 2016, rising to £9 by 2020.

Public sector pay will increase by 1% each year for the next four years.

Household benefits cap will be reduced to £20,000 outside of London where it will be £23,000.

Working age benefits to be frozen for four years, including tax credits and housing benefit, but not maternity allowances.

Child tax credit limited to two children for those born after April 2017.

Tax-free personal allowance raised to £11,000 in 2016, and the higher rate threshold boosted to £43,000.

The point at which people start paying income tax at 40p to rise from £42,385 to £43,000 in 2016.

Vehicle Excise Duty will be re-introduced for all new cars, with varied costs based on environmental friendliness.

The ‘artificial cap’ on the number of university students will be scrapped. Maintenance grants to be replaced by maintenance loans, which must be repaid when graduates earn more than £21,000 a year.

Fuel duty freeze will continue.

Inheritance tax threshold will be increased to £1m from 2017.

Real increase for defence budget every year to 2020-21. The Chancellor has also committed to the Nato target of spending two per cent of GDP on defence for the next decade.

Around £5bn will be saved over the next five years by tackling tax avoidance, planning, evasion, compliance, and imbalances in the tax system.

Social housing tenants on more than £30,000 (or more than £40,000 in London) will have to pay market-rate rents.

Corporation tax will be cut to 19 per cent in 2017 and 18 per cent in 2020.

The Employment Allowance will rise from £2,000 to £3,000 next year, meaning that employer National Insurance bills will be cut by another £1,000.

£30m of funding will be invested in transport for the North.

End to inherited and permanent non-dom status. Anyone living in the UK for 15 years or more would lose non-dom status.