The Chancellor, in Downing Street earlier, before unveiling the 2016 Budget

The Chancellor, in Downing Street earlier, before unveiling the 2016 Budget

The Chancellor, George Osborne, has announced a new state-backed savings scheme for low-paid workers worth up to £1,200 over four years.

Those who are on low paid wages and opt to put aside savings could receive a top-up of up to £1,200 over four years the Chancellor announced during his Budget speech in the House of Commons earlier.

The new arrangement means that employees on in-work benefits who put aside £50 a month would get a bonus of 50 percent after two years – worth up to £600.

That could then be continued for another two years with account holders receiving another £600.

As a result of this budget employers will also have to pay National Insurance contributions on termination payments over £30,000.

It was also announced by the Chancellor that the threshold at which people pay 40 percent tax will rise from £42,385 to £45,000 in April 2017. The National minimum wage will also increase by up to 4.7 percent.

Further announcements made by the Chancellor included:

Annual Isa limit to rise from £15,000 to £20,000

People will be able to save up to £4,000 a year until they turn 50

Headline rate of corporation tax – currently 20 percent – will fall to 17 percent by 2020

Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting thousands of firms

Petroleum revenue tax to be “effectively abolished”

£9bn to be raised by closing corporate tax loopholes

Fuel duty to be frozen at 57.95p per litre for sixth year in a row