Sugar tax, small business tax breaks and savings - the Budget 2016 explained

The Chancellor said the new tax would be introduced in two years' time, in a move which was greeted with glee by health campaigner Jamie Oliver who was following proceedings from the green outside the Commons.

The new tax is expected to raise £520 million which will be used to double the amount of funding for sport in every primary school, with secondary schools encouraged to offer more sport as part of longer school days.

Mr Osborne said in his speech: "One of the biggest contributors to childhood obesity is sugary drinks.

"A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13. That can be more than double a child's recommended added sugar intake."

He said the new tax will be assessed on the volume of the sugar-sweetened drinks produced or imported by firms.

Oliver took to Twitter and Instagram to praise the plan, saying on Instagram: "We did it guys!! we did it!!! A sugar levy on sugary sweetened drinks . . . A profound move that will ripple around the world . . . Business can not come between our Kids health!!

"Our kids health comes first. Bold, brave, logical and supported by all the right people . . . now bring on the whole strategy soon to come. Amazing news."

It was one of the surprise measures introduced in the Budget, alongside a new ISA, coming into force next year, which will give younger savers 25 per cent back for everything they pay in.

Due for introduction next year, people will be able to set up the ISA if they are aged under 40, and will be able to use it until they are 50.

They will be able to pay in up to £4,000 a year, which will then be topped up with £1,000 from the government.

The existing ISA limit will be increased to £20,000 a year for all savers.

Mr Osborne said: "You don't have to choose between saving for your first home or saving for your retirement – with the new lifetime ISA the government is giving you money to do both.

"For the basic rate taxpayer, that is the equivalent of tax-free savings into a pension and, unlike a pension, you won't pay tax when you come to take your money out in retirement."

Politicians in councils may be pulling a face, but one influential headteacher today insisted plans to make all schools into academies could work to help drive up standards across the board.

Sir Kevin Satchwell, headmaster at Thomas Telford School, welcomed the much advertised statement from George Osborne in the Budget.

He says he thinks the plans are the first stage, with a second stage to come which will see more schools grouped together in multi-academy trusts.

Sir Satchwell said Thomas Telford already works with seven other schools and he said in future these trusts could help good or outstanding schools work with others which may be failing and drive up standards.

But he said that the plans are not a "magic wand" and will not automatically fix all of the problems at a school, where good teaching will always be important.

He added: "In effect, we are an academy in all but name at Thomas Telford.

"The proposals do have a lot to commend them. It allows schools to make their own decisions and become more autonomous."

The Department for Education is expected to publish draft legislation on the plans as early as today.

Tom Plim is assistant principal at Priorslee Primary Academy, which took up its academy status five years ago and remains the only primary academy in Telford, apart from the newly-opened Lawley Village Academy.

He has also been acting head at Buildwas Primary School since it took up its academy status in February this year and the two schools are already part of a multi-academy trust.

He said the decision to turn Priorslee into an academy was taken as it would make the school better for its pupils.

He said: "It made us financially better off as there is no top level taken off by the local authority.

"That has allowed us to increase our intake, and build two new classrooms plus a new pre-school and a huge investment in our IT systems which wouldn't have been possible without our academy status.

"It also makes it more autonomous.

"We can set a curriculum around our school.

"We're also more accountable because we're not employed by the local authority, we're employed by the trust.

"There is no safety net from the local authority which is a big change.

"Lots of our services that are brought in are at best value because we're not tied in to the local authority.

Fuel duty will be frozen for the sixth year in a row after he defied expectations of an inflation-linked rise and beer duty has also been put on hold, while corporation tax will fall to 17 per cent by 2020 and there will be tax incentives for smaller businesses.

A 0.5 per cent increase to insurance premium tax will generate £700 million to boost flood defences, and in the wake of the Google tax bill row, there will be a fresh £12 billion crackdown on tax dodging by firms and individuals.

It had been widely expected that Mr Osborne would announce measures to give all schools academy status in the Budget, and this was confirmed during the speech.

Capital gains tax, corporation tax, and stamp duty on commercial premises were also reformed or cut in the announcement.

A duty freeze on beer, cider and spirits to support pubs and the whisky industry was welcomed, but there was "deep regret" that England's emerging wine success was not been similarly nurtured.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said 25 million spirits consumers would welcome the spirits duty freeze, but expressed disappointment that 30 million wine drinkers had been "singled out for a duty rise".

He said: "The freeze in wine duty in 2015 has resulted in £118 million extra in revenue to the Treasury in the last 10 months, up four per cent, which makes it very unfair that wine has been penalised."

Mr Osborne used the highly public platform to launch a fresh appeal for people to vote in favour of remaining in the EU.

He told MPs in the Commons that the financial watchdog the Office for Budget Responsibility said Brexit may have already contributed to market movements including the fall in the value of sterling.

Mr Osborne used his Budget speech to warn that a vote to sever ties with Brussels would "put at risk" the work done by the British people to "make our country strong again".

Delivering one of his most difficult Budgets yet, the chancellor was forced to admit that government debt will rise as a proportion of GDP this year – breaking a key rule he had set himself – and growth forecasts have been sharply revised down.

But he insisted the UK was "well-placed" to handle the worldwide slowdown and the deficit would still be wiped out by 2019-20 – thanks in part to another £3.5 billion of spending cuts.

He also said the country was expected to be running a £10.5 billion budget surplus by 2019/20.

The embarrassing debt admission – which followed the breach of his welfare spending cap – came in a speech to MPs that included a number of surprise measures as well as a host of grim economic data.

The single woman

Rozi Moore is a 31-year-old, self-employed writer who lives in Oswestry.

She says the Budget was predictably disappointing, particularly for those who have the least money.

"Everything seems to have been to benefit the haves rather than the have nots," she said. "What really riled me was the launch of the Help to Save Scheme in which those who can save £50 a month will get that boosted by the government.

"The idea that anyone who needs benefits to help them to live from day to day would be able to save £50 a month is ludicrous. People's ISA limit will be raised from £15,000 to £20,000 – that won't help anyone that I know – and the threshold at which people pay 40 per cent income tax rising from £42,385 now to £45,000 in April 2017 will again simply help the rich."

She said that the rise in personal tax allowance would help her.

The family man

Derrin Westcott, 47, is the owner of Bakers & Cooks on Bridgnorth High Street and lives with his wife Jo and children Isabelle, Joseph and Jacob in Bromley.

He said that he thought the Chancellor had the right idea with several of the initiatives he put forward.

He said: "I agree with the tax on sugary drinks, but once again that means a price increase which will affect those on low income.

"I am less sure about the savings incentive offered to low earners in that if they save £50 per month for four years they get a financial reward. You have to ask yourself if low earners have £50 a month spare to save, that feels more like a headline-grabber than proper policy.

"The freeze on fuel duty for another 12 months is of course welcome, but the rise in insurance tax premiums means that the government gives with one hand and takes with another."

The manufacturer

Simon Orpe, boss of Stafford Park-based manufacturer Wrekin Sheetmetal in Telford, said that adjustments to tax could benefit his business.

The company employs around 30 people at its site on the Telford industrial estate.

"Overall it's not too bad, there's certainly no shockers in there," Mr Orpe said.

"The changes to stamp duty on commercial premises will be good. We have been looking to buy our own premises for a while as an investment, and that makes it more attractive for us."

Mr Orpe added: "The cut in corporation tax is also good for us. It's a great help to businesses in that we are going to suffer an increase in costs because of the national minimum wage going up.

"This will help to counterbalance that from our point of view, which will help us out."

The small business

Telford-based Chris Pallett is the owner of IT specialist Bespoke Computing, which is a small business based on Stafford Park.

He said he would be helped by the reorganisation of business rates, which will mean about 600,000 businesses have the tax burden of their property removed from 2017-18. "As a small business we have to welcome the move to take so many smaller firms out of Business Rates from next year," Mr Pallett said.

"That does make a difference to a lot of people."

He added: "As a business with the interests of our clients at heart, we would have loved to hear something about investment in fibre infrastructure which would boost this country's competitiveness.

"Overall though, when you add in the announcement of rising personal tax allowances next year, it did feel like a small business-friendly budget, which we would always welcome."

Mounting an impassioned defence of his austerity programme, Mr Osborne argued it had saved the country hundreds of millions of pounds and prevented the next generation being "burdened".

He insisted the policies meant he was able to give tax cuts for millions of hard-working families – with the personal allowance rising to £11,500 next year and the higher 40p rate going up to £45,000.

In response, Labour leader Jeremy Corbyn said the Budget was the culmination of "six years of failures", and that it has "unfairness at its very core".

"It's a recovery built on sand on a Budget of failure," he said.

"He's failed on the budget deficit, failed on debt, failed on investment, failed on productivity, failed on trade deficit, failed on the welfare cap, failed to tackle inequality in this country."

Shropshire-based specialists were quick to have their say over the chancellor's announcement.

Ian Davies, partner at Tranter Lowe Chartered Accountants in Telford, said: "There was good news in the budget for many smaller businesses, particularly around small business rate relief, which many will no longer have to pay from April next year.

"That's important, as is the reduction in corporation tax to 17 per cent by 2020 and cuts to the rates of capital gains tax in three weeks' time will be significant to many. Some will also benefit from the new banding for stamp duty on commercial property transactions, with a zero rate on purchases up to a value of £150,000. That could stir investment in premises which SMEs might have been nervous of making given the economic climate of recent years."

A legal expert who acts for a large number of academies in Shropshire said the government's academy plan would "ruffle some feathers" in the education sector.

William Morse, employment partner and head of education at Lanyon Bowdler, who specialises in helping schools during their conversion to academies, said he was surprised at the timescale set by the government.

"It is a clear statement of intent from the government and it's a very short timescale for schools to make a major change," he said.

"The changes for staff and pupils when becoming an academy can be considerable, both culturally and financially.

"It's important that schools start thinking about the process as soon as possible, because from our experience the conversion to an academy can be smooth but only if schools get the right professional advice from the start.

"Academies are not popular with everyone within the education sector and these announcements will certainly ruffle some feathers.

"Conversion to academy can bring with it great benefits. The important thing is for people to take a positive approach, seek advice and start planning as soon as possible to make it work for their school."

Andrew Morton, who runs TaxAssist Accountants in Ludlow, Craven Arms and Leominster, said new relief for small business owners was among the most important measures.

"More than doubling the threshold for claiming small business rate relief, from £6,000 to £15,000, will mean that many local business owners will no longer pay any business rates for their office or shop premises," he said.

"This will be a major boost for many small businesses and will go some way to help level the playing field when competing against online only product and service suppliers.

"For many small businesses, particularly those which deliver products and services to our homes, cars and vans are essential not a luxury, so the continued freeze on fuel duty is further good news.

"Cuts to capital gains tax, changes to commercial stamp duty and plans to reduce corporation tax from 20 to 17 per cent by 2020 are also welcome."

Mr Morton said the 2016 Budget reflected the vital role that small businesses play in the United Kingdom's economy.

He said: "At last we have a Budget which has some measures to back small business and support the enterprise and hard work of this vital sector.

"They are facing new responsibilities and pressures, including workplace pensions schemes, the national living wage, dividends taxation changes and quarterly tax reporting.

"There are over five million small businesses in the UK, contributing a massive £1.8 trillion to our economy and providing some 15.6 million jobs. They deserve some positive news."