Philip Hammond‘s income tax cuts will “overwhelmingly benefit richer households” as the squeeze continues for lower-income families, according to one of the first independent analyses of the Budget. The verdict from the Resolution Foundation comes after the chancellor declared “austerity is coming to an end” as he unveiled his Budget, providing billions in extra cash for universal credit and the NHS while he setting out a cut in income tax. But the think-tank said that while Mr Hammond’s measures represented a “seismic shift” in the direction of public spending, it spelt an easing – rather than an end – to austerity. One measure of the claim, the organisation added, is that over three quarters of the £12bn of welfare cuts – announced by the former chancellor George Osborne in 2015 – remain government policy. The think-tank said half of the welfare cuts due to hit family budgets are yet to be rolled out, including a £1.5bn benefit freeze next April “that will see a couple with children in the bottom half of the income distribution loosing £200”. Despite the chancellor setting out £55bn in spending on Monday, the Resolution Foundation concluded that 84 per cent of the income tax cuts will go to the top half of the income distribution. “The richest tenth of households are set to gain 14 times as much in cash terms next year from the income tax and benefit giveaways in the Budget as the poorest tenth of households,” its post-Budget report stated. Addressing MPs in the Commons on Monday, the chancellor said he bring forward his party’s manifesto pledge by a year and increase the basic personal tax allowance to £12,500 in April 2019 while also raising the 40 per cent band tax rate to £50,000. Torsten Bell, director of the Resolution Foundation, said: “The Chancellor was able to navigate the near impossible task in his Budget of easing austerity, seeing debt fall and avoiding big tax rises, thanks to a £74 billion fiscal windfall. He chose to spend the vast majority of this on the NHS, income tax cuts and a welcome boost to Universal Credit. 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The celebration marks the end of the Muslim month of fasting, called Ramadan.<doc-sep>Philip Hammond has unveiled a post-Brexit tax cut for 32million workers and declared that the era of austerity is "finally coming to an end" with a £100bn package of public spending over the next five years. In one of the biggest giveaway Budgets in recent history, the Chancellor revealed that improvements in the economy will set a "new path for public spending" to help "strivers, grafters and carers". He pledged to bring forward income tax cuts by a year to April 2019, a month after Brexit, in a move that will save higher rate taxpayers an average of £495 a year and basic rate taxpayers an average of £130. As revealed by The Daily Telegraph on Saturday, the personal allowance, the rate at which people begin paying income tax, will now rise to £12,500 in April next year while the threshold for the higher rate of income tax will rise to £50,000. In a Budget speech lasting more than an hour, which was peppered with spending announcements, Mr Hammond said that further public spending would also be possible as a result of a Brexit dividend which would come with any deal agreed with the EU. However, the Chancellor also ploughed hundreds of millions more into no-deal planning and said that there was plenty of "headroom" should he need to borrow more in a possible emergency deal if Britain leaves the EU without a Brexit trade agreement.<doc-sep>First-time buyers in England who buy a shared ownership home will get the same stamp duty breaks for homes of up to £500,000 as other first-time buyers who received the concession in the last Budget. This will also be backdated for anyone who has bought such a property in the last year.<doc-sep>Chancellor Philip Hammond will deliver his autumn budget on Monday, less than a month after the Prime Minister promised voters austerity is over. We will find out whether he lives up to that pledge, as pressure grows on the government to boost the country’s ailing public services and soften benefits cuts. As usual a handful of giveaways have already been announced ahead of Mr Hammond taking to his feet at 3.30pm, a later kick-off time than usual. Some £2bn extra for mental health services has been trailed, part of £20bn extra for the NHS by 2023. Meanwhile the Chancellor is also expected to announce £30bn to fix the country’s crumbling roads and another fuel duty freeze, also already promised in the Prime Minister’s conference speech. Over the weekend it was announced that business rates would be slashed too, a £1.5bn move aimed at helping struggling high streets, which have been hit by two major shocks in the past week - news that Debenhams will be closing a third of its stores, as well as the threatened closure of Kendall’s in the new year. Pressure on the Chancellor has been growing to provide a lifeline for struggling public services across the country, as the effects of austerity rise up the political agenda. Cautious by nature, the Chancellor has repeatedly warned of the economic risks attached to Brexit - particularly if no deal is struck by the end of March. He is said to have knocked back a series of pleas from fellow ministers for more money. And while the Tories may be looking to reboot their party after a decade of austerity, forecasts by the Institute of Fiscal Studies indicate that even the most conservative cost of ‘ending’ the policy would require adding a penny in the pound to income tax, National Insurance and VAT. So is the pain really over? Tune in to our live blog below to find out.<doc-sep>
If you are earning £50,000 a year, the chancellor has just handed you a £860 income tax cut – or six times the £130 that will go to someone who earns £12,500 a year – as the centrepiece of a mildly giveaway budget haunted by the prospect of Brexit and anaemic economic growth. The income tax cuts will cost £2.7bn next year and line the pockets of the better off far more than those on lower incomes. The 20% tax band currently starts on earnings above £11,850, and when that rises to £12,500 next year someone earning around that mark will be better of by £130. That’s because they can earn another £650 without paying tax at 20%. But the big increase is in the point at which higher rate, 40% tax, will begin. This will jump from £46,350 to £50,000 from April. So if you earn £50,000, that’s an extra £3,650 that will be taxed at 20% rather than 40%, which adds up to a £730 cut. Together with the £130 gain from the basic personal allowance that is a total giveaway of £860. Some of this gain will be clawed back by changes to national insurance – which were not mentioned in the budget. The starting points for national insurance will rise only in line with inflation, or much less than the income tax giveaway, while on those earnings between £46,350 and £50,000 there will be 12% NI to pay. Accountants suggest that the £50,000 earner will be around £520 a year better off once NI is taken into account. Chancellors proudly report how many low earners they are lifting out of the tax net, but the biggest beneficiaries are always further up the income scale. The budget documents state that while the 26 million basic rate taxpayers will on average gain £20, the 4 million higher rate taxpayers will gain 11 times more – £228. For the very well off, the gains taper out – anyone who earns above £125,000 a year will have all their personal allowance tapered down to zero and will gain nothing from these changes. Hammond was determined to avoid the Halloween headlines, but at times this zombie budget veered into pantomime, with lengthy segments of the speech devoted to potholes and public loos, and little to personal finance. The Tory papers used to bash Gordon Brown relentlessly as the stealth tax raiser. There was some truth to this – he was very good at diversifying the sources of tax revenue. But as the Conservative party has placed any increase in income tax off limits, Conservative chancellors have followed the Gordon Brown model and gone searching for it everywhere else. If you feel that, despite cuts in income tax more of your money still manages to disappear in tax, you’re probably right. Taxes on home, motor and travel insurance policies have shot up, and last month alone brought in a record £1bn. Air passenger duty has taken off in the same way, with a further rise on long-haul flights announced on Monday. Once again fuel duty and beer duty were frozen. These have become political no-go areas, despite the huge hit to government revenues. Back in 1999/00 fuel duty brought in £23bn, equal to nearly half of the total amount we paid in VAT. Last year they brought in £28bn, or just a fifth of what we now pay in VAT. Drivers may whinge about the amount of tax on petrol, but the reality is that it has been falling in real terms for many years now. It’s wine drinkers who should be whinging. They will pay another 7p tax on a bottle of wine, which may not sound a lot but comes after relentless increases in recent years. Wine duty now earns around £4.3bn for the Treasury, or £1bn more than it picks up from beer, and is beginning to catch up on tobacco. Yet again, the chancellor raised duty on cigarettes, but it’s having the desired effect. Revenue from tobacco duties has fallen steadily from its peak in 2012 – but if it finally disappears in a puff of smoke as we all quit smoking that’s something everyone can cheer.