Budget 2016: Here are the reactions to Osborne’s announcements on sugar tax, corporation tax, Insurance Premium Tax, Isas, education and growth prospects
George Osborne has just announced some Budget surprises – a sugar tax, longer school days – as well as an increase in sin taxes on tobacco, alterations to ISAs and savings, and corporation taxes.
Here's what analysts are already saying about the chancellor's latest agenda on…
David Kilshaw, private clients services partner, EY
“Many basic rate taxpayers will benefit from the increase to the personal allowance. However, for the lowest paid the personal allowance is already pitched above their earnings – an increase in the National Insurance thresholds would have had a more significant impact on their wallets.”
Ian Wright, director general, Food and Drink Federation
"We are extremely disappointed by today's announcement of a new tax on some of the UK's most successful and innovative companies. For nearly a year we have waited for an holistic strategy to tackle obesity. What we've got today instead is a piece of political theatre. The imposition of this tax will, sadly, result in less innovation and product reformulation, and for some manufacturers is certain to cost jobs. Nor will it make a difference to obesity."
Jamie Cartwright, senior associate, Charles Russell Speechlys
“Today’s sugar levy represents a marked change in stance from Government compared with its response last year to petitioning for a sugar tax. And while this is a tax directly on manufacturers rather than consumers, it’s hard to see how the cost would not be passed on to consumers.”
“The two year implementation period set out by the Government is intended to provide time in which manufacturers can vary ingredients. For iconic brands and flavours this is perhaps unlikely. But we can expect to see a continuation in the development of alternatives to sugar, providing consumers with choices at the checkout.”
Andrew Storey, sales director, eValue
“Osborne’s Budget surprise of a Lifetime Isa for the under 40s is set to rock the boat. Generation Y can now combine the employer contribution benefits of auto-enrolment with this new government boosted ISA to maximise savings like never before. However, young people must understand that it’s crucial to keep saving into a pension scheme, and not to see the Isa as a simple alternative. Instead, the combination allows them to save for their first home and for a comfortable retirement.”
Adrian Walker, retirement planning expert at Old Mutual Wealth.
"The lifetime Isa is a gimmick that will only appeal to younger savers looking for help getting on the housing ladder. Very few people will use a Lifetime Isa to save for old-age and pensions are still the best retirement savings vehicle.
"The £1 bonus for every £4 is parity with the basic rate relief you currently receive on a pension, but crucially without employer contributions. Younger savers will also have to place faith in future governments not to renege on the promise of a bonus at age 60."
Insurance Premium Tax
Amanda Blanc, chief executive, AXA UK & Ireland
"An increase in IPT is never welcome but there is some solace in the fact that the increase is not as extreme as feared and that the Chancellor has promised to use the money raised from the 0.5 per cent increase to invest in flood defences.
"The increasingly volatile weather that we face in this country cannot be resisted anymore and we must learn to live with it. Investment in flood defences is welcome but defences alone are not the answer."
Paul Smith, chief executive, haart estate agents
"The country’s housing shortage can only be solved by boosting the supply of new homes, and the government could have gone further in making this a priority. While the Lifetime Isa is a positive step forward that will make it easier for people to save for a deposit on a home, more should have been done to bring housebuilding into greater focus. In his budget, George Osborne claims to put the next generation first, but this missed opportunity means that the supply of homes will continue to be low, leading to greater pressure on prices, which will largely affect first time buyers in the majority."
Jonathan Riley, head of tax, Grant Thornton UK LLP
"It could be argued Osborne's opening gambit, while nodding towards the strong recent growth for the UK, massively underplayed the huge future uncertainties that the UK faces, both nationally, globally and economically. OBR forecasts are bleaker, with slowing growth and the debt to GDP ratio actually rising. Lots of grand promises, and cost cutting policies, were announced as well as a continued commitment to balancing the UK’s books by 2020."
Anil Stocker, co-founder and chief executive, MarketInvoice
"The chancellor has finally put small businesses at the core of his economic plan. For a long-time small business owners have felt ignored by the chancellor in favour of the world’s largest multi-nationals. Today he began to redress that imbalance."
Richard Wollich, partner, DLA Piper
"This is an adventurous Budget from an imaginative chancellor. There are plenty of surprises – particularly in the case of the sugar levy and an increase in stamp duty land tax on commercial property from 4 per cent to 5 per cent. He has cleverly balanced help for small businesses with popular measures against big businesses."
Capital Gains Tax
Stephen Ludlow, chairman, ludlowthompson
"If the Government dissuades investors from selling their property because of significant tax charges, the market will become entrenched. Despite the Government wanting to increase available stock, house prices may be pushed up as investors put fewer properties on the market, which could allow an asset bubble to grow. The Government should stop discriminating against the buy-to-let industry as investors play a vital role in ensuring labour mobility and improving the standard of rental stock."
Simon Bashorun, financial planning team leader, Investec Wealth & Investment
"The increase in the distance between income tax rates and CGT rates will make drawing on capital each year as a form of ‘income’ even more attractive than it currently is. This reinforces the need for individuals to build up portfolios which can provide gains to draw down on tax efficiently in the future. Alongside the changes to the taxation of dividends and the normal annual capital gains allowance, the reduction in CGT rates makes directly held stocks and share investments very attractive indeed in certain situations."
Mike Redshaw, director, Nolan Redshaw
"Overall, I would commend the good housekeeping contained within the budget, with growth predictions still positive and a sensible commitment to a budget surplus. My biggest concern, however, is over the deliverability of the proposed infrastructure investment into the Northern Powerhouse. Although the backing for HS3 is to be welcomed, with no widening of the M62 having taken place since 1971 and with current levels of infrastructure investment five times higher in the South East than the North, the proposed road improvements within the North, including the M62, are way overdue and the finance needs to be guaranteed now."
Joe Mathewson, co-founder, Firefly
"This is the biggest change to education since the closure of grammar schools… The chancellor's plan to allocate £500m to ensure a "fair funding" formula for schools creates opportunities for transformation in education. Regardless of whether full academisation by 2022 in and of itself leads to school improvement or not – and this will be a long and heated debate – this draft legislation well and truly opens the door for the ambitious teacher and the "teacherpreneur"."