Budget 2015: new £1,000 tax allowance for savers

Mr Osborne said that, under the new personal savings allowance, the first £1,000 earned in interest would be completely tax-free – abolishing savings tax for 17 million people.

“People have already paid tax once on their money when they earn it. They shouldn’t have to pay tax a second time when they save it,” he said.

“At a stroke we create tax-free banking for almost the entire population.”

He said the new help-to-buy ISA would be accompanied by a new “fully flexible ISA” giving savers complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement.

Together with the plans to allow pensioners to cash in their annuities, he said the Government was conducting a “savings revolution”.

As expected, he said the personal tax-free allowance will go up to £10,800 next year, rising to to £11,000 the year after.

And he said that, for the first time in seven years, the higher rate tax threshold would go up by more than inflation, rising from £42,385 this year to £43,300 by 2017-18.

The Chancellor also offered some pre-election cheer for the regions, including a £1.3 billion support package for the North Sea industry, struggling from the impact of falling world oil prices.

He said a provisional agreement had been struck to allow Greater Manchester to keep 100% of the additional growth in local business as part of the Government’s drive to build a “Northern powerhouse”.

A similar deal was being offered to councils in Cambridge and the surrounding area, while the Midlands would benefit from a £60 million investment in the new energy research accelerator

The South West will get a new rail franchise, bringing new intercity express trains, while Wales would see the Severn Crossing toll rates cut, with the higher band for vans and buses abolished altogether.