Chancellor George Osborne has outlined a three point budget designed to focus on stablising the economy, simplifying the tax system and reforms aimed at supporting growth.
Osborne blamed previous administrations for an unstable model of economic growth that has led to record levels of public debt.
He has said the government’s target is to reduce debt levels to £12 billion by 2016/17 while encouraging a more resiliant financial sector. To the latter, the banking levy will rise to 0.105%.
In terms of financing, the Debt Management Office is considering the issuance of longer dated government bonds with the possibility of a perpetual gilt currently under consideration.
As part of an overriding theme aimed at encouraging businesses to the UK, the corporation tax rate will be dropped from its current rate of 26% to 22% by 2014.
A £3 billion tax allowance for oil and gas exploration projects was announced along with tax credit schemes for video game makers, animation firms and “high-end” TV production companies.
Osborne outlined plans to make the UK into “Europe’s technology centre” by cutting taxes on patents.
Tax reforms for low income earners were also outlined, with the personal allowance rate set to rise to £10,000 by 2014. The rise of £1,100 was described as the largest ever increase in this area.
A single-tier £140 pension was confirmed along with a state pension that will reflect life expectancy.