Welcome to our 2012 Budget coverage. Below, you'll find the key points of the speech plus links to reaction and analysis. The economic constraints mean it'll be a Budget of limited change, so for a glimpse of what might have been, see "The Alternative Budget Speech" below.
■ Hooray! Higher-rate tax relief on pension contributions is here to stay, at least for another year - although there's cap on big contributions. The generous reliefs on EIS and VCT announced last year also stay;
■ But age-related allowances are frozen at current levels;
■ Stamp duty land tax on properties worth £2m or more rises to 7 per cent and there's a punitive new regime for top-end homes owned through offshore companies
■ Personal allowance rises to £9,205 from next April and top rate of tax will drop to 45p from 50p, ostensibly because it didn't actually raise that much money;
■ But threshold for 40p tax band falls (yes, falls) to £41,450 - bringing an extra 300,000 people into higher-rate taxation;
■ Good for hics, bad for coughs: 37p on a pack of 20 cigarettes, but alcohol duty frozen;
■ Corporation tax down to 24 per cent, unless you're a bank - the bank levy rises to offset lower corporation tax;
■ Small improvement in OBR's growth forecasts - now 0.8 per cent this year instead of 0.7 per cent. Contrast to eurozone, where OBR forecasts cut sharply;
A selection of reactions from the torrent of 'reax emails' arriving at the IC!
"There remains a certain woolliness around the figures that such measures may raise and the Chancellor will be under strong pressure - both in the UK and from such barometers at the credit rating agencies – to show he will be able to balance the books. "
- Francesca Lagerberg, Head of Tax at Grant Thornton
"The good news is that all the main tax reliefs have been left untouched – so pensions and Isas continue to be the important investment vehicles they are today. Uncapped tax reliefs generally used in aggressive tax avoidance schemes - that is except charitable giving - will be capped from 2013 at £50,000 or 25% of earned income, whichever the greater."
- Brewin Dolphin
"The chancellor’s Budget has given a helping handout to his rich friends in the City and delivered a slap in the face to the unemployed and low-paid families."
- Dave Prentis, general secretary, Unite
"While any tax reduction is welcome, the chancellor has not done enough to free business from the burdens and barriers that are holding economic growth back. Businesses dearly want the opportunity to invest, create and build, but George Osborne must go much further if he wants to fire up the engines of the economy."
- Institute of Directors
"Overall, this is a fiddly, piecemeal budget. It includes some welcome steps but much of the devil is buried in the detail...The government deficit reduction strategy has already drifted off target and relies on rather optimistic growth figures over the next few years. The Chancellor should seek to find greater reductions in state spending to allow for substantial, across-the-board tax cuts before the end of this Parliamentary term."
- Mark Littlewood, director general, Institute of Economic Affairs
The Alternative Budget Speech
"Mr Deputy Speaker, my Budget address will be the shortest in history, beating even Disraeli in 1867. It will also be among the most radical. I will not insult the intelligence of both the House and the electorate by making promises I cannot keep, in the hope that by the time I'm found out, I'll be in the chamber next door or on the US lecture circuit. I will make no economic forecasts; the future is unknowable and the Treasury's forecasting record is woeful. And I will not hand out titbits to one constituency or another in order to win political favour.
I cannot afford to. We have announced some measures to curb public spending, but they are a drop in the ocean and many are yet to even take effect. Public spending continues to rise, as it has almost throughout modern history. Our weak economic growth means tax receipts have been disappointing. No amount of peripheral tinkering with rates, reliefs allowances and exemptions will alter this reality. We have all been living beyond our means for too long. It is time to stop doing so.
Many have counselled me to abolish the 50p rate of tax. Mr Deputy Speaker, I will do better than that. I will move towards harmonising all personal and corporate income taxation at one fiscally-neutral level, abolishing the ludicrous deception of national "insurance" for both employees and employers. I will replace stamp duty on property and share purchases with a revised capital gains regime, including indexation, that taxes real returns and not investment. Debt interest payments will cease to be tax-deductible.
Some criticise tax relief on pension contributions as a perk for the well-off. I agree. Indeed, Mr Deputy Speaker, I suggest that the pension system is so convoluted and inflexible that it's of little benefit to anyone. So, subject to appropriate transitional arrangements, I will abolish tax relief on all private pension contributions. Instead, we will substantially increase the annual individual savings account allowance, creating a simple long-term investment vehicle with no relief on money in and no tax on money out. No government has the right to tell its citizens what they can and cannot do with their own money, so the compulsion to buy an annuity will be scrapped.
I anticipate that unemployment will rise in the short term, as thousands of accountants, tax advisers and sundry other bureaucrats are forced to search for more productive employment. I cannot solve the nation's economic problems overnight. But I can make a start. Mr Deputy Speaker, I believe these initial reforms set a truly bold agenda for economic growth and personal financial liberty, and I commend this Budget to the House."