Chancellor John Healey has delivered a Budget that freezes fuel duty for the sixteenth consecutive year, confirms a £374 annual boost for basic state pensioners, and introduces a temporary bank tax hike to fund energy support.
The Chancellor said the measures are designed to provide "breathing room" for businesses and households.
Pension and Tax Announcements
The Government remains committed to the triple lock, with older state pensioners on the basic pension receiving a £374 annual boost. Pensioners relying exclusively on the DWP state pension will be exempt from paying income tax, even as payments exceed the frozen tax threshold.
Mr Healey also announced affordable housing funding of more than £1 billion, alongside £432 million to tackle rough sleeping.
Business and Banking Measures
A temporary bank tax hike was confirmed to fund energy support, increasing the bank surcharge by an extra 3% on top of the existing corporation tax rate. This reverses a previous Conservative tax cut, drawing praise from unions but raising concerns from City leaders about stifling investment.
The starting threshold for small business rates relief will rise from £12,000 to £18,000 to protect high street shops. This will be funded by increased taxes on higher-stakes gambling machines.
Defence and Savings Plans
The UK will establish a new multilateral defence mechanism with Finland, Poland, and the Netherlands. The Chancellor said he is "getting work under way" to reach spending of 3% of GDP on defence by 2030, and will set out how he will hit that target at next year's Spending Review.
The Chancellor scrapped previous plans to slash the Cash ISA allowance to £12,000 for savers under 65, maintaining the £20,000 limit protects younger savers who prefer cash security and spares banks and building societies from a complex wave of anti-avoidance regulations and red tape.
