2013 United Kingdom budget

The 2013 United Kingdom budget was delivered by George Osborne, the Chancellor of the Exchequer, to the House of Commons on Wednesday 20 March 2013.

It was the fourth budget of the Cameron government that was formed after the 2010 general election, and also the fourth to be delivered by Osborne.

Its key points included an increase in the personal allowance, the merging of income tax and National Insurance, a freeze of the rate of fuel duty, and the cancellation of the duty escalator on beer.

Taxes and revenue
The personal allowance each UK employee is entitled to earn before income tax is levied was increased for the third consecutive budget, to £10,000, from 2014. The increase had been planned to become effective in 2015 but was brought forward one year.

In the 2011 budget, a consultation was announced on long-term plans to merge income tax and National Insurance to simplify the tax system. In this budget, Osborne reported he planned to implement such proposals, paid for by an increase in the basic rate of income tax to 22.5%. The increase in the basic rate was eventually scrapped after backlash from Conservative MPs, with the proposal instead paid for by an increase in VAT to 25%.

Osborne cancelled an increase in fuel duty that had been planned for September 2013, and also cancelled a 3p increase in duty on beer planned for April 2013, instead cutting the beer duty by 1p from 24 March 2013. The duty escalator on beer was also cancelled, but remains in place for wine, spirits and cider. Duties on cigarettes were unchanged.

Tax incentives were announced for ultra low-emission vehicles and for investment in shale gas.

The Staffordshire Potteries industry will be exempt from the Climate Change Levy.

Benefits and expenditure
An additional £15 billion of investment was announced for infrastructure such as roads, railways, power stations, and major construction projects by 2020.

Cuts of around 1% were announced to many government departments' budgets, except the Department for Health and Department for Education.

The income from fines arising out of the Libor scandal shall be given to soldiers' charities. Military wages would also be exempt from limits on progression pay rises imposed on the public sector.

Economy
Osborne stated that the Office for Budget Responsibility (OBR) predicted that the UK would not enter recession again in 2013. The OBR cut its forecast for economic growth in 2013 to 0.6% from 1.2%. It forecast growth to be 1.8% in 2014, 2.9% in 2015, 3.1% in 2016, and 2.8% in 2017.

The OBR predicted government borrowing of £91 billion in 2013 and £64 billion for 2014. Government debt as a share of gross domestic product was forecast to increase from 68.9% in 2013 to 75.6% in 2016.

The majority of the other business tax changes announced impact small businesses, now receiving the benefits of the National Insurance Contribution. SMEs will also benefit from a certain number of reliefs such as capital gains relief on Seed Enterprise Investment Schemes and stamp duty relief from trading AIM-listed shares, which will help them raise capital. As for larger companies, the advantages of the new budget and incentives will be focused on Research and Development.

Public procurement
The budget announced the government's intention to use the procurement process to promote suppliers' tax compliance.