Let me explain to the House what this means.
From April next year, 600,000 small businesses will pay no business rates at all.
That’s an annual saving for them of up to nearly £6,000 – forever.
A further quarter of a million businesses will see their rates cut.
In total, half of all British properties will see their business rates fall or be abolished altogether.
And gets rid of tax for small businesses.
Stamp Duty
Just over a year ago, I reformed residential stamp duty. We moved from a distortive slab system to a much simpler slice system.
And as a result 98% of homebuyers are paying the same or less, and revenues from the expensive properties have risen.
At the moment, a small firm can pay just £1 more for a property and face a tax bill three times as large. That makes no sense.
So from now on, commercial stamp duty will have a zero rate band on purchases up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000.
There will also be a new 2% rate for those high value leases with a net present value above £5 million.
This new tax regime comes into effect from midnight tonight. There are transitional rules for purchasers who have exchanged, but not completed contracts before midnight.
Severn Bridge Toll
I’ve listened to the case made by Welsh colleagues and I can announce today that from 2018 we are going to halve the price of the tolls on the Severn Crossings.
Sugar Tax
A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13.
That can be more than double a child’s recommended added sugar intake.
Let me give credit where credit is due.
Many in the soft drinks industry recognise there’s a problem and have started to reformulate their products.
Robinsons recently removed added sugar from many of their cordials and squashes.
Sainsbury’s, Tesco and the Co-op have all committed to reduce sugar across their ranges.
So industry can act, and with the right incentives I’m sure it will.
I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation:
I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.
So today I can announce that we will introduce a new sugar levy on the soft drinks industry.
Let me explain how it will work.
It will be levied on the companies.
It will be introduced in two years’ time to give companies plenty of space to change their product mix.
It will be assessed on the volume of the sugar-sweetened drinks they produce or import.
There will be two bands – one for total sugar content above 5 grams per 100 millilitres; a second, higher band for the most sugary drinks with more than 8 grams per 100 millilitres.
Pure fruit juices and milk-based drinks will be excluded, and we’ll ensure the smallest producers are kept out of scope.
We will of course consult on implementation.
We’re introducing the levy on the industry which means they can reduce the sugar content of their products – as many already do.
It means they can promote low-sugar or no sugar brands – as many already are.
They can take these perfectly reasonable steps to help with children’s health.
Of course, some may choose to pass the price onto consumers and that will be their decision, and this would have an impact on consumption too.
We understand that tax affects behaviour. So let’s tax the things we want to reduce, not the things we want to encourage.
The OBR estimate that this levy will raise £520 million.
And this is tied directly to the second thing we’re going to do today to help children’s health and wellbeing.
We’re going to use the money from this new levy to double the amount of funding we dedicate to sport in every primary school.
And for secondary schools we’re going to fund longer school days for those that want to offer their pupils a wider range of activities, including extra sport.
It will be voluntary for schools. Compulsory for the pupils.
There will be enough resources for a quarter of secondary schools to take part – but that’s just a start.
A determination to improve the health of our children.
A new levy on excessive sugar in soft drinks.
The money used to double sport in our schools.
Fuel Duty
A Britain fit for the future.
So I can announce that fuel duty will be frozen for the sixth year in a row.
That’s a saving of £75 a year to the average driver; £270 a year to a small business with a van. It’s the tax boost that keeps Britain on the move.
Tobacco Duty
Tobacco duty will continue to rise as set out in previous Budgets, by 2% above inflation from 6pm tonight – while hand rolling tobacco will rise by an additional 3%.
And to continue our drive to improve public health we will reform our tobacco regime to introduce an effective floor on the price of cigarettes and consult on increased sanctions for fraud.
Pub Industry
I’ve always been clear that I want to support responsible drinkers and our nation’s pubs.
5 years ago we inherited tax plans that would have ruined that industry.
Instead, the action we took in the last Parliament on beer duty saved hundreds of pubs and thousands of jobs.
Today I back our pubs again. I am freezing beer duty and cider duty too.
Scotch Whisky accounts for a fifth of all of the UK’s food and drink exports.
So we back Scotland and back that vital industry too, with a freeze on whisky and other spirits duty this year.
All other alcohol duties will rise by inflation as planned.
Class 2 National Insurance
Let me start with Enterprise.
We know that when it comes to growing the economy, alongside good infrastructure and great education we need to light the fires of enterprise.
And our tax system can do more.
To help the self-employed I’m going to fulfil the manifesto commitment we made, and from 2018 abolish Class 2 National Insurance Contributions altogether.
That’s a simpler tax system and a tax cut of over £130 for each of Britain’s 3 million strong army of the self-employed.
Capital Gains Tax
Our Capital Gains Tax is now one of the highest in the developed world, when we want our taxes to be among the lowest.
The headline rate of Capital Gains Tax currently stands at 28%
Today I am cutting it to 20%.
And I am cutting the Capital Gains Tax paid by basic rate taxpayers from 18% to just 10%.
The rates will come into effect in three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest.
So faced with the truth that young people aren’t saving enough, I am today providing a different answer to the same problem.
Savings
We know people like ISAs – because they are simple.
You save out of taxed income; everything you earn on your savings is tax-free; then it’s tax-free when you withdraw it too.
From April next year I am going to increase the ISA limit from just over £15,000 to £20,000 a year for everyone.
And for those under 40, many of whom haven’t had such a good deal from the pension system, I am introducing a completely new flexible way for the next generation to save.
It’s called the Lifetime ISA.
Young people can put money in, get a government bonus, and use it either to buy their first home or save for their retirement.
Here’s how it will work.
From April 2017, anyone under the age of 40 will be able to open a Lifetime ISA and save up to £4,000 each year.
And for every £4 you save, the government will give you £1.
So put in £4,000 and the government will give you £1,000. Every year. Until you’re 50.
You don’t have to choose between saving for your first home, or saving for your retirement.
With the new Lifetime ISA the government is giving you money to do both.
For the basic rate taxpayer, that is the equivalent of tax-free savings into a pension, and unlike a pension you won’t pay tax when you come to take your money out in retirement.
For the self-employed, it’s the kind of support they simply cannot get from the pensions system today.
Unlike a pension you can access your money anytime without the bonus and with a small charge.
And we’re going to consult with the industry on whether, like the American 401K, you can return money to the account to reclaim the bonus – so it is both generous and completely flexible.
Those who have already taken out our enormously popular Help to Buy ISAs will be able to roll it into the new Lifetime ISA – and keep the government match.
A £20,000 ISA limit for everyone.
A new Lifetime ISA.
Tax Free Allowance
A Budget that puts the next generation first.
In two weeks’ time it will rise to £11,000.
We committed that it would reach £12,500 by the end of this Parliament.
And today we take a major step towards that goal.
From April next year, I am raising the tax-free personal allowance to £11,500.
That’s a tax cut for 31 million people.
It means a typical basic rate taxpayer will be paying over £1,000 less income tax than five years ago.
And it means another 1.3 million of the lowest paid taken out of tax altogether.
We made another commitment in our manifesto and that was to increase the threshold at which people pay the higher rate of tax.
That threshold stands at £42,385.
I can tell the House that from April next year I’m going to increase the Higher Rate threshold to £45,000.
A personal tax free allowance of £11,500.
No one paying the 40p rate under £45,000.
