BUDGET BRIEFING
BUDGET BRIEFING BUDGET SETS BATTLE LINES FOR THE ELECTION Wednesday 18 March 2015 The Chancellor of the Exchequer today delivered his final Budget before the General Election, and laid out his arguments for reelection in May. With positive economic indicators, favourable inflationary winds, and a reduction in estimated borrowing, the Chancellor has been able to announce a series of measures designed to sway crucial undecided voters before May. Eyecatching announcements included further reductions to personal allowances, duty cuts for beers and spirits, and a further fuel duty freeze. A number of changes were also made to pensions and savings taxation. General economic indicators The Office of Budget Responsibility (OBR) announced revised growth forecasts of 2.5% in 2015, 2.3% in 2016 and 2.3% in 2017. The ONS has stated there has been a fall in unemployment of 102,000, now standing at 5.3%, compared to 7.2% a year ago. RPI inflation is forecast at 1% in 2015, increasing to 2.1% in 2016. POSITIVE MEASURES IN CHANCELLOR’S PRE-ELECTION BUDGET Mark Tanzer, ABTA Chief Executive With positive economic indicators highlighting increased employment and a growing economy, today’s Budget included some announcements that will be of interest to the travel industry. The Government’s review of business rates – to report in time for Budget 2016 – will provide a welcome opportunity to overhaul the outdated and expensive business rates regime. ABTA will engage closely with this review to put forward the views of ABTA Members. Other measures such as investment in transport infrastructure and tax changes, including abolishing apprentice national insurance and further personal tax allowance rises will be welcomed by travel businesses and their employees. On Air Passenger Duty, it is of course disappointing that Band B APD will rise by inflation from April 2016; however, the Government’s commitment to looking at the negative impact of devolved APD on England is an opportunity to continue to highlight the damaging impact of this tax overall – and must be viewed as an opportunity to bury this destructive duty once and for all. ABTA – The Travel Association 1 ABTA Budget Briefing 2015 18 March 2015 APD – Further inflationary rises in 2016 As confirmed in the Autumn Statement, APD will increase in line with inflation in April 2016. However, banding changes announced in the 2014 Budget see the removal of Bands C and D from 1 April 2015. Child APD abolition, announced in the Autumn Statement, will proceed as announced. APD for under 12s will be abolished from 1 May 2015, and for under 16s from 1 March 2016. The Chancellor expects to collect £3.2bn in 2014-15, rising to £3.9bn by 2018-19. This reflects the structural changes, higher passenger numbers, and the assumption that APD will rise in line with RPI over the period. Bands (approximate distance in miles for the UK) Reduced rate Standard rate Rate from 1 April 2015 Rate from 1 April 2016 Rate from 1 April 2015 Rate from 1 April 2016 Band A (0-2000 miles) £13 £13 £26 £26 Band B* £71 £73 £142 £146 *from April 2015 this will include all long-haul flights currently in Bands C and D Key points round-up Key announcements made by the Chancellor include: A review of business rates to examine the structure of the current system, with anticipated changes to be announced at the 2016 Budget; Further changes to pensions which will likely impact five million existing pensioners; An increase to the national minimum wage by 20p an hour to £6.70 from October 2015. The hourly rate for younger workers will also rise by 17p to £5.30 for 18 to 20 year-olds, and by 8p to £3.87 for 16 to 17 yearolds. The hourly rate for apprentices for those not entitled to the national minimum wage will increase by 57p to £3.30 an hour by October 2015; The annual tax return will be scrapped by the end of the next Parliament in favour of an online returns system; The Personal Tax-Free Allowance will rise to £10,800 in April 2016-17 and £11,000 in 2017-18; From April 2016 a tax-free Personal Savings Allowance of £1,000 will be introduced. Those with ISAs will be able to withdraw and replace money in the same tax year without losing their tax advantage; Changes to Government procurement rules which will allow a sharing economy in accommodation and other services; Cancellation of the previously announced Fuel Duty increase which was due in September; Beer Duty will be reduced by a further 1p, duty on cider and spirits will be cut by 2%; From April 2015 the corporation tax rate will fall from 21% to 20%. All announcements made today will, of course, be subject to the next Parliament. For full details on the documents published by HM Treasury, please click here. For more information, contact ABTA’s Head of Public Affairs Stephen D’Alfonso on [email protected] or on 0203 117 0561. ABTA – The Travel Association 2
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