/ Money

Budget 2012 winners and losers – what’s your verdict?

Cartoon man with question marks in head

So, how was it for you? According to the opinion poll we carried out straight after the Budget, most were unimpressed. Six in ten felt the Budget would make no difference or would be worse for their family.

Generally the mood remains distinctly downcast following yesterday’s Budget, with 73% of the 2,083 Brits we asked expecting little or no improvement to their household finances over the next year.

So, as the dust settles, let’s have a look at some of the Budget in detail and work out the winners and losers.

The Budget 2012 winners

At first glance, the winners look to be higher-rate tax payers (earning over £150,000), who will see their tax rate fall from 50% to 45% next year.

Slightly less wealthy winners are couples who were in line to lose their child benefit because one of them was a 40% taxpayer (earning over £42,475).

Previously, households where a single parent was earning just over this threshold (say £43,000) would not get any child benefits. This is compared to couples earning as much as £80,000 between them still receiving benefits, as neither were in the 40% tax bracket.

This has been addressed by the Chancellor with the introduction of a graduated withdrawal of child benefit. Once one partner earns £50,000, child benefits will be reduced by 1% for every additional £100 earned. Only those earning more than £60,000 will lose all their benefits.

And to a certain extent we’re all winners; at least the 29m of us who pay tax. This is because your personal allowance (the slice of your income that’s kept tax-free) will be increased to £9,205 in 2013. It was the most popular measure among our pollers, with 92% in favour.

That’s apart from higher-rate taxpayers, as the threshold at which they start paying 40% tax will be dropped slightly to claw some money back.

The Budget 2012 losers

Still, the extra money most people will get is hardly a king’s ransom. This year the extra tax-free amount you can keep will result in £126 less tax. And it’ll be around £220 from April 2013 (or £18.30 a month).

No wonder the people we asked weren’t more enthusiastic. Nearly two-thirds said the Budget would make no difference to their plans to make large purchases, and half said it wouldn’t make a difference to their ability to pay for day-to-day essentials either.

But, in a ‘simplification’ of personal allowance, pensioners are the real losers of the Budget. Currently pensioners get a higher personal allowance than everyone else. In 2012-13 it’s £10,500 for those over-65 and £10,660 for over-75s.

However, from 2013 these rates will be frozen, while allowances for under-65s will increase. Eventually the gap will be eroded completely and we’ll all be getting the same.

Is this fair? Is it a major loss? I suppose that depends on how old you are, and how high your income is. Age-related allowance is means-tested already, so wealthier pensioners won’t notice much difference, but the poorer ones will lose out.

Tax evaders should lose out too – but nobody feels much regret for them. George Osborne described them as ‘morally repugnant’ and announced a raft of measures to make their lives uncomfortable. That at least should cheer the rest of us up – and help the government balance its books.

So what’s your Budget 2012 verdict? Have any of these measures made you feel more confident about your finances?

Comments
Profile photo of richard
Member

To me as an OAP on state pension – I will be losing. It didn’t surprise me – I knew the Tories would punish us somehow. I hope the Tories will lose the next election decisively I can only assume the increase in death rates of OAPs will free more houses for the pampered (comparatively) young to enjoy.

Member
Zuludawn says:
22 March 2012

I sometimes wonder whether people really understand how serious everything is, irrespective of how we have arrived here, a certain % continually moan about everything, I hear endless ‘experts’ saying the government haven’t done enough, they haven’t been creative enough, blah blah, But NO suggestions as to what the alternatives are. The reason is there is not one single idea out there that will fix the problems apart from buttoning down the hatches and trying the best we can to deal with the situation we are in. As for the so called rich, many of them are self made, use their talents, create employment, create wealth, pay already high taxes. I run a business that employs 24 people. That’s 24 people employed, in work, earning! reason our business is successful because of a few individuals that have worked their backsides, and equally the people in our business are highly motivated and want to achieve. This budget was never going to appease everyone, it certainly wasn’t going to make many happy, did anyone really think it would? Lest not forget who was asleep at the wheel over the past 12 years, they were responsible for running this country,..,they were as bad as the bankers!

Profile photo of John Ward
Member

Generally I thought Budget 2012 [as it is now called in guv speak] was satisfactory and in line with expectations. The Chancellor has probably not explained the changes to the age-related personal allowances sufficiently and the outcry about the implications for the rising 65’s, and ultimately all pensioners, should have been predicted. I can see no moral justification for pensioners having a higher personal tax allowance than working people. I expect the Chancellor to get out of this particular scrape by raising the winter fuel allowance – after all, keeping the heating running all day is the major burden on pensioners not experienced by people who work in a factory or office building and the allowance is per household and not per person. While he was in the business of removing the cliff-edge from child benefit entitlement we had hoped for some loosening of the inequitable stamp duty land tax thresholds and percentage rates which are stifling the housing market [although it has to be said that the £250,000 threshold – where 3% on the whole price kicks in – is having the effect of forcing down the price of property in the £250-265K bracket]; NB – the foregoing remark is probably offensive if you happen to be seeking a property in the south east so apologies for mentioning it.

Member
Sue says:
23 March 2012

I totally agree with Zuludawn and John Ward. Hopefully this budget will get this country back on its feet which it needs to do before anything else. Stop moaning, we’re all in this together. Labour always criticize but never come up with a sensible solution. Look at the mess they made of the country while in power. They were going to put fuel up by 10p, if they had stayed in power, have people forgotten that. I’m an OAP and will get a £5 increase in my state pension from April + the benefit of free bus travel and free prescriptions and concessions. Some people just take this for granted. The media are partly to blame with all there negative reporting and scare tactics without looking at all the positive facts.

Member
David says:
23 March 2012

I am 79, but the Granny Tax will make little difference for me because my pensions add up to over £25,000. So my allowance is now the same as someone much younger who is still earning salary, and that will go up by something over £1000. You think I don’t pay any income tax on the DSS pension? By a sneaky sleight of hand they add that to my occupational pension for the purpose of calculating what I have to pay.
But I haven’t got much to complain about. I paid in for 40 years so I can live reasonably well, even though most of what I earn goes on food and diesel fuel. I get free prescriptions, a bus pass and all those other goodies. So what’s my beef?
Briefly this: I know so many pensioners who have £10,000 to 15,000 a year. They will rub along, with difficulty, for a year or two, buying the cheapest food, not going out too often, turning down the heating and putting on an overcoat and a scarf and gloves when the winter is cold. But if their allowances are not indexed in future they will find the price of everything rocketing up and they will suffer in silence until they starve or suffer hypothermia, if they haven’t already gone with cancer, heart attack, pneumonia or stroke. Meanwhile Mr Moneybags the millionaire has his tax bill going down so that he saves as much in one year from the tax man as the pensioner receives in five, after having worked hard for forty years to ensure dignity and security in old age,.And then there are those who don’t even get £10,000. What happens to them doesn’t bear thinking about.
Mr Gideon George Osborne and Mr David Cameron, millionaires both of you – can you, in your blackest moments, imagine being in that state in forty year’s time? Of course you can’t. You have no idea what difficulties old people face when they haven’t a rich inheritance from Papa and Mama.
One nation toryism went years ago. Now it is just the rule of the smug and self-satisfied over everybody else. Shame on you!

Member
Owen says:
23 March 2012

Whilst I have no objection in principle to the so called “granny tax”, I do feel that the chancellor was disingenuous when he said that the pensioners would still be getting an increase and would be better off. This is only true if you look soley at the cash amounts. Inflation means that pensioners will be worse off. Presented properly as a small increase for pensioners who had so far escapes the worst of the cuts, it would not seem unfair. I shouild add that I am one of those who will suffer as a rsult of this tax change.

Member
Brian says:
23 March 2012

It no supprise a granney tax on the old, a nice target.
For rich tories allways been the same.
Rich do well old lose out.

Member
Snowdin says:
23 March 2012

My wife and I are pensioners approaching 65 but the online calculators suggest we will be slightly better off next year, “in cash terms,” as the politicians are keen to say. Let’s forget about inflation, eh? The patronising nonsense about pensioners not being able to understand forms and “how we gave the pensioners the biggest rise ever” are simply the usual lies that are standard practice for politicians. It does, however, seem ridiculous that pension rises are based based on the randomness of inflation in any given September. I presume this must have been because at some time September was reliably the month of lowest inflation, but September 2011 was a nice surprise for once. My real concern, however, is for the young people entering work. They do need some taxation fairness because they will be paying off the debt left by our generations almost ad infinitum. Not only can they not get on the housing ladder (a good thing in recent years with falling prices despite Brown trying to manipulate the market), but they have huge increases in their own lifelong pension costs, they have to pay our unfunded pension costs and those of private sector workers as we live longer, some have university loans to pay off, and they keep getting stuffed with extra new costs like the recent Post Office Pension Scheme transfer. It can’t be as much fun being young at present. I think we have to accept our fair share of the hardship.

Member
Chris says:
23 March 2012

I don’t know who advises the government on budget policy but I suggest whoever it is should be sacked as it was a public relations disaster. To on the one hand give a handout to people earning over £150,000 and on the other take away from pensioners in the current financial climate plays right into the hands of their critics and they deserve all the criticism they get. They are so detached from reality that they can’t see it is the message sent out rather than what is or is not brought in by the 50% tax that matters. Since it was originally expected to bring in significantly more, the chancellor would have been better employed investigating why that return has not materialised, and plugging the loopholes being used by creative accounting etc.
I have no objection to genuine entrepreneurs being well rewarded for their efforts, but most of the senior executives, financiers, footballers, celebrities and others being paid these astronomical amounts in no way fit into that category, and there is no possible justification for it. Since they show no signs of modifying their (‘morally repugnant’) demands, they should be subject to more, not less, taxation.
What this government also seems to have a complete blind spot about is that no amount of tinkering with interest rates, business friendly policies etc is going to achieve much if the demand isn’t there in the economy. There is no point in creating jobs making products that no-one wants or can afford to buy. Their policy of maintaining rock bottom interest rates may appear superficially to benefit industry, but it is destroying that base of savers who are potentially the very ones able to inject some life back into the economy.

Member
Gordon Hutchins says:
24 March 2012

Baffled by all the headlines. I am 71. My PAYE Coding Notice 2012-13 received recently tells me that my tax-free allowance for the coming year will be £8105, NOT the widely publicised £10,500 – and that’s because my income exceeds around £31K a year. So if there’s already an income-related cap on the tax-free allowance, why all this outcry? I was already a loser….but I’m not complaining. Broadly, the government is doing its best to be fair and to support those on lower incomes. The tax cut from 50p to 45p is marginal in its actual effect, though the Opposition – and the media – had to try to latch on to something. And incidentally, I’m NOT a Tory voter.

Member
retired says:
27 March 2012

Lucky you having an income exceeding 31K – I’ve been a single mum for 25 years and have an income of less than a third of that! I was hoping that for all my hard work over the years and the struggle my children and I have had retirement would have brought some rewards!

Member
Rufus says:
24 March 2012

It’s good to see 2 parties in coalition working together to clear up the mess this country is in. Labour’s critical attempts to brand one of the Parties as “old time Tories” simply heightens my suspicion that Labour hasn’t changed; it still sees Society in terms of 19th Century class warfare. I’m over 65 so one of the theoretical losers in this Budget, but I’m happy to join the young, the “squeezed” middle class, and, yes, the high earners, all of whom either lose something or have lost something already, in the interests of this country. We are all in this together after all. Well done Cameron and Clegg! Keep it up!

Member
brian j says:
25 March 2012

To me it seems a fairly neutral budget in the main, unless you are a top rate tax payer!! I cannot understand the concept that, by decreasing the top rate of tax, the treasury actually collects more revenue. Whilst appreciating the need to encourage wealth and employmment creators, is it likely, that if a person has been successful in ” legally” avoiding paying tax, now the top rate is reduced they will begin to pay up. To me it seems highly unlikely and something only the chancellor would believe in!

Member
Willie says:
26 March 2012

I think David and Snowdin are pretty close to the mark- Unless one managed to get a pension of £25k or over people will really start to see a negative difference quite soon as neither G Osborne -nor ,apparently N.Clegg seem to want us to ‘remember’ that the numbers stacking up means little once Inflation is considered……Most of us are still trying to cope with the last few yers Inflation and- as one currently trying to organise a worthwhile Annuity for the next (say +/-20 years) the whole thing appears a rigged game where EITHER the Provider ( or whoever holds ‘our’ fund) or the Govt walks off with the greastest proportion of it in almost every case.
-One realises things are in flux, but it shows a distinct lack of confidence in their own abiltities to do more than pay good salaries to their directors if they can’t offer at least a fairly equable deal to ‘savers’.
Meanwhile generations of politicians have failed the following generations by continuing to allow any reasonable ’cause and effect’ connection between effort and reasonable reward / advancement with the mesmerisation of ‘big wins’ and (so called ) celebrity- this too seems a form of ‘class war’ by those pulling the strings and the erosion of relative security for anyone not in the super-rich bracket,who are (of course) intent on maintaining the difference.
I think we should try to insist they talk in terms of sustaining value and not obfusticate with just ‘numbers’, which soon become misleading in the context of inflation.

Member
Michael Scott says:
26 March 2012

Instead of focussing on the 50% rate it is a pity he didn’t address the high marginal rates at the point bwhere allowances are withdrawn, for example the older persons allowance and the loss of personal allowance at 100k.which results in a marginal tax rate of over 60% for many professionals. Lets get rid of these anomalies and give everyone the same allowances and have a truly progressive taxation system And instead of means testing benefits like child allowance why not just make them universal and taxable. It reduces the administration costs and means the better off benefit less.

Profile photo of KevinOGorman
Member

The 2012 budget needed to build confidence to get people out spending so that the economy can recover. Judging by the feedback it has failed. This will delay the next phase of economic growth. I do worry that we are heading for the kind of rampant greed and capitalism that has left 40 million Americans below the poverty line.(No economy can work with 90% of the wealth stored in the bank accounts of 5% of the population which will lead to social unrest) It’s easy to say work harder,save for retirement etc etc but It’s too late for many of our ageing population who are unable to cope with annual rises above inflation on many of the essentials like Energy, fuel, food etc. Labour’s response was effective but do they really think we’ve forgotton the mess they left us in. The Conservatives have to protect the City of London against threats to moving the financial centre overseas with a devastaing effect on UK GDP but did they really have to rob pensioners to do it?. Fuel Duty adds to the inflation cost on everything we buy and Alcohol duty is causing pubs to close and driving the price of On Trade consumed alcohol to luxury levels. Is it not time to have a democratic party based on helping to make the lives of every citizen better by ensuring fairness across the whole of society including those who think Benefits are a way of life. I’m afraid UK politicians of all parties have lost touch with the reality of living in the UK. None of us are being treated in a fair and equitable way. There is a massive opportunity for a new political party based on UK limited and not the tired boom bust cycle of tax & spend(Labour) versus tax and cuts in services(Conservative) policies of the current 2 parties. ( I exclude Liberals as they will do and say anything to get a vote then change their policies to suit). I implore anyone with the necessary skills to come forward and break the duopoly which currently exists and put forward a manifesto based on developing the UK and it’s citizens with fairness as the main strategy