Budget 2016: Sugar tax on sweetened drinks announced

Examples of drinks which would currently fall under the higher rate of the sugar tax include full-strength Coca-Cola and Pepsi, Old Jamaica ginger beer, Capri Sun blackcurrant, Red Bull, strawberry Ribena, Lucozade Energy, Irn-Bru and Fever Tree tonic water, the Treasury said.

The lower rate would catch drinks such as Dr Pepper, Fanta, Sprite, Schweppes Indian tonic water and alcohol-free shandy.

Frappuccinos which contain high amounts of sugar will be exempt because they are milk based, not water based.

Some drinks with small amounts of added sugar escape altogether including Volvic Touch of Fruit, Vimto, Powerade and Tropicana Smooth Orange.

In other big Budget measures, Mr Osborne raised the tax free allowance and introduced a lifetimes ISA for young people to save tax-free. He slashed the headline rate of capital gains tax from 28 per cent to 20 per cent on investments but not on second homes.

But Mr Osborne began his eighth Budget speech by warning of “a dangerous cocktail of risks” that required firm action. He spoke of “storm clouds gathering again” on the global economy and a “greater risk of economic derailment” - words that had MPs bracing themselves for bad news.

And it came within minutes of his speech starting when - to jeers from Opposition MPs - the Chancellor unveiled a massive downgrade in the economic targets unveiled in his Autumn Statement just four months ago.

On growth, he tore up the healthy 2.4 per cent forecast for 2016 and replaced it with just two per cent, followed by 2.2 per cent in 2017, and 2.1 per cent until 2020.

That in turn meant sharply higher borrowing until 2019 - up in 2016/17 from £49.9 billion to £55.5 billion; up in 2017/18 from £24.8 to £38.8 billion; then lurching up in 2018/19 by a massive £16 billion, from the forecast of £4.6 billion to £21.4 billion.

MPs heckled as Mr Osborne said that would be followed by a surplus of £10 billion in 2019-20, meeting his target to make a surplus in that year. Labour leader Jeremy Corbyn - making his first Budget response speech - said slower growth showed “a recovery built on sand” and claimed that disabled people would pay “the price of his failure” in the form of spending cuts.

Labour said he appeared to have front-loaded borrowing to avoid the embarrassment of missing his goal of a pre-election surplus.

Opposition number crunchers also said the small print of the Red Book revealed a big rise in the tax burden to the highest level since 1985, at 37.5 per cent by the end of the parliament, compared with 36.2 per cent in 2000.

Mr Osborne insisted the global economy and not his decisions was to blame for the slower growth.

“Our economy is strong, but the storm clouds are gathering again,” he said. “Our response to this new challenge is clear.

Budget 2016 as it happened: a wrap-up of our live blog

“A Budget where we act now so we don’t pay later.

“In this Budget we choose the long term. We choose to put the next generation first.”

He was buoyed on his way to brief Cabinet by another fall in the jobless figures. Official statistics showed the number of people claiming Jobseekers Allowance fell by 18,000 to 716,700 last month. Average earnings rose 2.1 per cent in another boost.

Among new taxes to raise money, an increase of Insurance Premium Tax by half a per cent will be earmarked for new flood defences.

Mr Osborne enraged Tory eurosceptics by making a heavy-handed intervention into the EU referendum debate.

He waved a new report by the independent Office for Budget Responsibility, which writes the official forecasts, warning that a Brexit vote in the June 23 referendum “could have negative implications for activity” and cause “a period of potentially disruptive uncertainty”.

The Chancellor then threw his full authority against a vote to leave, saying: “I believe we should not put at risk all the hard work that the British people have done to make our country strong again.”

One Tory MP turned to the Press Gallery in response and mouthed the words “complete bollocks”.

The episode was turning into a bitter row tonight. The Vote Leave campaign accused Mr Osborne of “politicising the OBR” by using its name to frighten voters.

The threshold for paying the 40p tax rate of income tax, currently £42,385, will rise to £45,000 in April next year.

“That’s a tax cut of over £400 a year,” said Mr Osborne.

“It is going to lift over half a million people who should never have been paying the higher rate out of that higher tax band altogether. And it’s the biggest above inflation cash increase since Nigel Lawson introduced the 40p rate almost thirty years ago.”

The tax free personal allowance will go up to £11,000 in two weeks time and £11,500 in April 2017.

From April next year, the ISA limit will rise 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,” Mr Osborne added.

“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.”

Mr Osborne announced that from 2018 Class 2 National Insurance Contributions would be abolished, which he trumpeted as a tax cut of over £130 for each of Britain’s 3 million strong army of the self-employed.

The headline rate of Capital Gains Tax currently 28 per cent is to be cut to 20 per cent, and the rate paid by basic rate taxpayers from 18 per cent to ten per cent.

The changes will come into effect in three weeks time but the old rates will be kept in place for gains on residential property and carried interest.

A new ten per cent rate is being introduced on long term external investment in unlisted companies, up to a separate maximum of £10 million of lifetime gains

Corporation Tax is cut by another penny to a rock bottom 17 per cent - undercutting rival countries across the developed world. “Britain is blazing a trail, let the rest of the world catch up,” boasted the Chancellor.

He more than doubled the small business rates relief threshold, saying 600,000 firms would pay nothing at all from April. Some MPs saw the giveaway as aiming to curry favour among a community who tend to favour a Brexit.

Commercial stamp duty will go down for small firms but a new two per cent rate will go on “high value leases with a net present value above £5 million” from midnight.

But he vowed to squeeze £9 billion more from tax-avoiding companies, including by cracking down on luxury property developers in London who shift profits to the Channel Islands and the Isle of Man to avoid tax.

And he unveiled a “tax break for the digital age” by offering small traders on eBay a £1,000 tax-free allowance, with a similar perk for people who

In an historic act of devolution to London, the Chancellor announced that City Hall will keep the revenues from business rates from April - three years earlier than planned - and credited Mayor Boris Johnson and Tory candidate Zac Goldsmith for having “passionately” argued for it.

Lord Heseltine will head a new Thames Estuary Growth Commission to boost development east of the capital.

Mr Osborne joked as he confirmed cash for Crossrail 2 that it would help Londoners like Jeremy Corbyn who “live in north London and are heading south”.

Ministers are also going to examine the teaching of maths to all pupils up to the age of 18.

Fuel duty was frozen for the sixth year running.

The Budget included plans to speed up the release of spare land owned by the NHS and other public bodies to for thousands of much-needed new homes.

It also promote new “garden villages” outside the centres of towns and cities - as an alternative to the stalled garden cities idea.

The Chancellor’s warning about storm clouds made clear he sees the key question for today’s Budget being how Britain responds to headwinds blowing in from the global economy and buffeting Britain cannot be immune. His answer was that the country cannot simply hunker down but must take tough decisions to boost productivity and strengthen the public finances.

Mr Osborne confirmed a string of eye-catching measures that were trailed in advance of this afternoon’s speech.

Longer school days will keep millions of pupils in the classroom for an hour longer each day, scrapping the Victorian tradition of a 3.30pm finish in thousands of secondaries. They will bid for £1.5 billion of government funds to provide five extra hours of lessons, sport or art.

He said it would “make sure that every child gets the best start in life” but road experts warned of traffic nightmares when evening school runs are delayed to the rush hour.

The Chancellor extended his reach further into the education field by announcing that all schools in England will be forced to become academies. The highly controversial step aims to end the role of London boroughs as lead providers of education by 2022.

In a popular giveaway, he promised cash for 500 amputee children to get running blades so they can take part in sports.

He gave £300 million towards a series of major long-term transport projects, including funding to progress London’s planned north-south Crossrail 2 scheme linking Surrey with Hertfordshire via a huge new tunnel under central London, due to open after 2030. Other schemes going forward include the HS3 high-speed link between Manchester and Leeds,

And he unveiled £110 million worth of special measures to eradicate rough sleeping in London after a rise in homelessness, including accommodation for 2,000 people.

A new scheme to boost savings will offer to add 50 per cent to any money low income people put aside up to the value of £300 a year. However the cash must be kept in savings for two years - with the bonuses disappearing if withdrawn early.

A “Paxman tax” will crack down on high earners who siphon their salaries via personal service companies to avoid income tax. In 2012 it emerged 1,500 presenters – including former Newsnight anchorman Jeremy Paxman – were paid as freelances through companies. But the Treasury believes 20,000 public sector workers are using the same ruse to avoid £3,500 in tax each, ranging from civil servants to the police and even Bank of England staff. Closing the loophole will raise £400 million a year.

But the Chancellor stifled some of his reforming zeal for fear of generating too much controversy during the run-up to the June 23 referendum.

The biggest casualty of the referendum “ceasefire” were radical plans to overhaul pension tax relief which the Treasury had spent six months working on. They were shelved for fear of sparking a Tory rebellion and a backlash among middle and higher earners.

Mr Osborne’s goal of cutting the 45p top rate of tax is also on hold.