/ Money

Today’s Budget – how positive was it really?

Chancellor of the Exchequer George Osborne holding the red budget box, photo by Andrew Parsons

From increasing the personal tax allowance, to better tax relief for new businesses, are you convinced that this year’s Budget has done enough to help people out in austere times? Or is it too little too late?

Our money experts have been busily following today’s Budget and summarising the key points.

Chancellor George Osborne said the focus of these measures was to provide a ‘budget for growth’ in order to give a boost to the stalled economy:

‘Last year’s emergency Budget was about rescuing the nation’s finances, and paying for the mistakes of the past. Today’s Budget is about reforming the nation’s economy, so that we have enduring growth and jobs in the future.’

Are you convinced that today’s Budget will have a positive effect? Here’s a summary of the key points for you to mull over…

Personal taxes and duties

  • New tax avoidance measures to raise £1 billion.
  • Changes to Gift Aid – the amount that you can give without filling out forms has increased to £5,000.
  • Personal tax allowance will increase to £8,105 in April 2012.
  • On Air Passenger Duty, a tax per plane, rather than per passenger, would be illegal under international law. The government will campaign to change the law. A planned air passenger duty rise will be delayed for a year.
  • No further change in rates on alcohol duties other than those already announced. Tobacco duty rates up by 2% above inflation.
  • Fuel Duty Escalator will be cancelled for the rest of this Parliament. Fuel Duty to be cut by 1p per litre today and the planned 4p per litre rise to be delayed until 2012. The new Fair Fuel Stabiliser will be funded by increasing the supplementary charge on North Sea oil and gas production from 20% to 32%.

Taxation

  • There will be a consultation on merging National Insurance and Income tax. The aim is to make the tax system ‘fit for the modern age’.
  • Corporation tax is to be cut by 2% rather than 1%. Bank levy rate to be adjusted to offset its effect.
  • Help for start-ups and new small businesses. Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April 2011.
  • The charge for non-domiciles will be increased to £50,000 for those who have been in the country for 12 years.

Growth and development

  • New shared equity scheme ‘First Buy’ will help 10,000 people get on to the property ladder for the first time. This will cost the government £250 million and be funded by the bank levy.
  • There will be £100 million extra on the science budget and £200 million extra allocated to upgrading regional railways. The aim is to create 21, and not 10 as originally planned, new ‘enterprise zones’.
  • £2 billion committed to the Green Investment Bank which will start work in 2012.
  • The small business rate relief holiday is being extended by one year to October 2012, at a cost of £370 million.
  • 24 new university technical colleges will be created.

Economy

  • Inflation expected to be between 4% and 5% this year, falling to 2.5% and 2% over the following 2 years.
  • Borrowing to fall to £122 billion next year, dropping to £29 billion by 2015-16.

What do you think of today’s Budget?

So will today’s Budget announcements have any impact on your life? Do you think it’s a positive Budget – as Osborne would like us to believe – or should the focus have remained on further cuts?

Comments
Guest
Brad says:
23 March 2011

The Chancellor was caught between a rock and a hard place. There are no easy solutions and he did just about as well as could be expected. However, as a 76 year-old pensioner I do have a couple of grumbles.

1. Why do increases like petrol duty, cigarettes etc., come in immediately, yet most benefits are withheld until the next financial year in April 2012?

2. Why does the proposed OAP target apply only to new pensioners and not existing ones? It doesn’t seem quite fair.

Guest
DENNIS WARWICK says:
23 March 2011

The consultation about merging National Insurance and Income Tax must focus particularly on pensioners who up to now have not had to pay any more national insurance. If the two “taxes” merge, then pensioners must be given an allowance equivalent to the amount of national insurance which non-pensioners with equivalent incomes would have to pay. This is a thorny issue and it is surprising that the Chancellor did not indicate first thoughts on how some kind of allowance for pensioners would be structured. The whole idea of National Insurance was that those of working age would support the rest so that benefits, medical provision and pensions would be funded. Clearly however the sums might not be adding up as more of the population are living longer.

Guest

The increase in personal allowance this year is ignoring the previous law (known I beleive as the Booker/Wise amendment), which said that the allowance should be increased each year in line with the cost of living index.
Then the £1000 increase should be applied.
Are we being fooled ?

Guest
mike mulligan says:
23 March 2011

Every one agrees that measures to control the spiralling debt were required, but as soon as it affects them, they squeal, aided by the media. Are we able to “have help” across the board? I think not, it should be saved for the hardest up. I believe that in spite of his smug appearance and the fact there’s a lot more pain down the road, G. Osborne has got it largely right – except in encouraging students to run up massive debts for jobs that aren’t there. We have to get away from Credit Culture and become more self-sufficient, particularly in food and energy, even if it means a drop in living standards.

Guest
Philip says:
23 March 2011

Inflation is out of control and the treasury know it which is why the inflation proof National savings were withdrawn. Time to stop printing money. The carbon tax is idiotic and will just contribute to increasing inflation and driving unemployment up by making us less competitive. We will import goods from countries that aren’t buying into this idiocy so our carbon footprint won’t change.
The spending cuts are going much too slowly.

Guest

I will need some convincing that 10% of ones estate, balances a 10% reduction of inheritance tax – to 36%? – of taxable estate? Some clarification required, I think.

Guest
Ross says:
23 March 2011

Does anyone know how this will affect a pension where currently income tax is paid but national insurance plays no part? Could this mean income tax will go up by the 10 or 11% or so when national insurance in merged. This will be a worry for many people who had retired with a pension. (Not a state pension)

Guest

Hi, Ross. George Osborne did suggest that pensioners wouldn’t pay any more:
‘I am not proposing we extend National Insurance to pensioners, or to other forms of income, or that we abolish the contributory principle.’
The details are still very vague. We’ll report on more detail as it is published.

Guest
Blanche Brough says:
23 March 2011

I was interested in the chancellors comments about simplifying the tax system. As pensioners my husband and I found this to be the humorous part of the budget, especially as we are among the many that for one reason and another will be expected to pay, so called underpayment of taxes for four years ago. Surely it is not only we the public who need to understand the current tax but it may help staff at H M R C get it right first time, thus saving on administration costs to them and anguish and despair to working class pensioners.

Guest

wow, a 1p reduction in fuel duty. I can really see my £1.50 saving a month boosting the economy. Personally, I’d have kept it as it was to force those who drive more to change the way they drive instead of moaning about high fuel prices!

How about an EU-wide tax and duty on airline fuel?

Guest

On £97 a week – I will not benefit from the minimum tax hike – so no £600 increase – but I suffer all the price rises. In fact as expected I will suffer under the New Tories as I did under the old Tories.

The winter fuel allowance is to be reduced – so my chances of death by hypothermia will be increased. Still second hand blankets are cheap.

The proposed rise to £140 for pensioners will not apply to me – somehow I’m being blamed for the crisis – so will have to suffer the gradual reduction of my state pension – just as I had to for the last 15 years..

I do hope the coalition is disbanded very soon – they are useless.

Guest

Not sure how it will affect me.

I currently own a house but am renting it out. My impression is that I would be better off to use the equity in it to buy a house here, so I would get better rates if I was remortgaging.

Or with this new scheme from the government, would I be better off selling my house outright and then buying a new one as a first time buyer?

Guest
Petrus Maximus says:
24 March 2011

Far too many people use cars unreasonably. Fuel duty should be held for commercial vehicles but doubled for private cars. We need to get people to use cars when neccessary. Otherwise bicycles or public transport to get to work – or better work from home.
And as in Japan a rule that you cant have a car unless you have a parkign space. That gets cars parked off road which helps traffic flow.

Guest

“When necessary” Have you seen what years of unfunding and privatisation have done to public transport. Points at Channel 4’s Dispatches programme on trains shown Monday 21st.

When I had a job, public transport would have taken longer to get to work than going by car, and I’m not even including the time to get to the station. And thats assuming everything was on time 100% of the time, which was all know it never is.

The state of public transport, you’d have to pay me to use it (even when I’m umemployed and not on benefits), and it would need to be a large amount not some token gesture.

Guest
Stephen says:
25 March 2011

William is right. Currently it takes me an hour to get to work (35 miles) on the worst stretch of motorway in the country (M6 J10a – J6), where I am gridlocked and crawl to work. This is infinitely better than the public transport across the West Midlands, where a 2 carriage train turns up at 5:00 travelling from Birmingham to Chester, it is so overcrowded that I have seen paramedics called because of scores of people fainting.
If I, and the people like me decided to get the train, not only would it overload the system, I would be uncomfortable, my journey would take longer, and the cost savings aren’t that much.
If the public transport in the rest of this country had half as much investment and infrastructure as London, more people would use it.
Oh, and Petrus, the Japan analogy would be very good if we had an integrated system of public transportation, road building programmes and a proactive transport/planning strategy anywhere near the Japanese model (or even the U.S.A.). Unfortunately, we do not.

Guest

Based on the bigger picture, generally refered to the “age of austerity” and the nationwide economic implications of this due to previous decisions by other governments, for all of the sufferings presently (and yes, I’ll be one who will also be paying the price for our current economic chaos) I think Osbourne has done very well.

Am I better off?
No, not really.

However, having been fortunate enough to have an hour of explanations from a top-notch economic expert some months ago, I feel that in the face of the enormity of financial crisis this country faces, we’ve been let off lightly.

Guest

Just got it

The governments shared equity scheme is basically what Northern Rock did a few years ago to help people get a 100% or more mortgage.

The mortgage is within the LTV amount, the rest is given in an unsecured loan, which you pay off when you house supposedly goes up in value and you move.

Guest
Fat Sam, Glos says:
24 March 2011

I don’t understand why people are so against what the coalition are proposing. In case some people have missed the headlines over the last couple of years Britain is basically up ***** Creek without a paddle, with a humongously fat deficit that is still spiralling ever outwards and is unlikely to be wiped out in most of our lifetimes. Sorry folks for the downer (but at least it’s sunny outside).

Things would be much better under Labour of course – the same people who didn’t help us stay out of this mess. I didn’t see Labour helping us much – starting with Blair they instilled the culture that taxpayers must be squeezed for every penny they had to pay for everything and anything – it’s a surprise that the sunshine outside wasn’t taxed by them.

Guest
Adrian McTiernan says:
11 September 2011

Talking about taxing sunlight – there was in the past (how long back I don’t know) a tax on window glass, and so people started to have smaller windows – not a very healthy idea, follow the logic, have no windows, you pay no tax and leave the front door open to get a bit of light in. Another daft idea from our wonderful Governments of times past. The poll tax was an old idea too – and when it was introduced, our predecessors had the right idea – the collectors of taxes were recieved badly, ducked in the duck pond, roughed up and sent packing, and various other insults. The tax died the death – now they just renamed it – bad news, it’s been spun out of existence!

Guest

^ the fact that the taxpayer must be squeezed to create more jobs in the public sector outside of london due to the economic imbalances in this country.

These jobs are now going and so they have to redress the national economic imbalance, step forward HS2!!!

Guest
Paul says:
24 March 2011

I am retired and live off of pensions and investment income, on which I pay tax. What worries me is that the proposed merge of NIC and income tax will cost people like me who are not employed, a great deal of money. I am resigned to baling out the banks and the profligate through artificially depressed interest rates, but having seen my income drop by a third in the past year because of that, I do not wish to also recommence paying NIC.

Guest

£100m to help with potholes? So what are councils likely to do with their slice of the handout? Only pay the same companies who have let the roads get into the mess their in now. Seems a waste of a perfectly good £100m to me. Maybe the chancellor should spend the money on implementing a simple system so people can keep an eye on the cowboy road maintenance companies, cos councils aren’t.

Guest
Ross says:
24 March 2011

Thank you Ian Robinson for your helpful comment above. Feel a bit better than I did.

Guest

IMNSHO, someone on a pension in excess of £100,000 a year should continue to pay National Insurance.

But back to the main question: AUSTERE TIMES. No the Chancellor has only taken a small step towards turning the economy. We are going to suffer for another 4 years before we see a significant improvement.

Guest

You are right – It will be called a Labour Government.

Guest

The Government want to reduce bureaucracy in pension calculation but propose to make the change for future pensioners but not existing. At the same time they are planning to increase the age at which the State pension is drawn.

Are they complete idiots or is it just spin and will be quietly dropped?

There are far more currently receiving a pension than those who will receive it in the foreseeable future so this will increase bureaucracy. Especially as the dreaded “died in service” will return reducing the number of future pensioners.

Guest
Sallyb says:
24 March 2011

Once again the pensioners are left in the lurch, everything rises except their pensions. We pay out more to legal & illegal immigrants. We should pull out of the EU the money we would save would pay off out debts in no time.

Guest

As a “pensioner” on £70.00 per week state pension who earned at the most £15000 per annum by working six days a week including evenings and weekends, I have to empathise with Richard above, only of course I have to continue working for a minimum wage. I feel very angry about pensioners who complain that they only have £22000 a year to live on. On that amount I’d have had a charmed life.

Guest
tabalf says:
25 March 2011

Why has the Chancellor not abolished the recent loss of personal allowance for those with incomes between £100,000 and £113,000 introduced recntly by Labour? This causes a marginal tax rate of 60%, higher than those earning more than £150,000. Surely he could have achieved the same revenue by lowering the 50% threshold to say £125,000 or £130,000, the level at which pension contributions are capped.
There are other inequities with marginal rates, over 70% for incomes between £7475 and £27,000 and again between £40,000 and £43,000. These would be a bit more complicated to rectify due to these numerous benefits that are lost at these levels.

Guest

Basically, he needs the money. Unfortunately, income tax isn’t really about being fair.

The problem is the system is FAR too complex for everyone and the result is these anomalies. Another example is child allowance discrepancy between a single earner and dual earners.

I could ask why those of us between 65 and 74 who receive an age-related allowance lose the allowance £1 for every £2 above the allowance (currently £9490). Its the same for 75 and above but a slightly higher threshold.

He who giveth, taketh away. Roll on tax and pension simplification.

Guest

Terfar –

It is much worse – what about long term care? Why should I as a pensioner have to pay up to £30,000 a year for long term care until I have no money – that someone of say 55 gets absolutely FREE??

Or – the fact if I go in hospital for any time my pension of £97 is reduced to zero – leaving me to pay to keep my home together without money – yet a person say of 50 will get sickness benefit. Why don’t I get sickness benefit??????

I can only assume that pensioners are to be punished for being alive.

Frankly I haven’t been “giveth” – I paid for my pension for 45 years – yet I am certainly suffering the “taketh away”

Guest

A Budget without a ballanced pain distribution would be foolish. My enduring worry is “what would Labour have done to fund the exchequer without weakening the spirit of their electorate?” After all, on who’se watch did the Financial Metdown happen. Who advised all the Labour Councils to place their Funds in the Icelandic Banks – to dissappear into the Ether a few years later?
The massive Debt must be closed as soon as practibly possible, but the wealthiest must also contribute.
And it must not happen again!! I love my Pension and want to be able to enjoy it as well as the next Family. I hope my sore comments do not offend the innocent, or the less so. But draw COMMENT.

Guest

Despite Cameron pledging to retain fuel allownace, he’s reduced it for all pensioners and why are existing pensioners not receiving the uplift that new pensioners will receive, i.e. £140 basic pension?
We will have a two tier pension society but he didn’t have the guts to highlight this.

By the time the increase in personal allowances comes in next April any benefit will have been eroded.

Same old Tories is spot on, roll on the next election.

Guest

I think it is because existing pensioners are older and so will die faster by reducing pensions through the CPI fraud by starvation – and reducing the Winter Fuel Allowance just to increase death rates by hypothermia.

But as you say – continuation of the Thatcher policy removing the link to average earnings.

Never mind the cuts will hurt everybody but the rich – Bit sad that pensioners will suffer most – and will not be able to safeguard their pensions because they are too old and risky to get insurance or assurance whereas worker will be able to (or at least the wealthier ones).

Roll on the next march – it may persuade the Lib-Dems to break up the coalition or face removal from the political scene.

The next election may be too late for me.
.

Guest

Blimey, sounds like pensioners really are getting a raw deal, I didn’t realise.

Incidentally, with means testing, does the government take into account savings? That would be harsh if they did. All those years saving up and being frugal and for what? Getting penalised by the very state that encourages you to save!

No, we need fair rules for a fair society and that includes those who have spent their entire years contributing to the state’s coffers. Isn’t that what Nick Clegg wanted? Now even I’m having doubts about this coalition…

Guest

They take everything into account – especially savings. .

It is one of the things I’m bitter about – We were encouraged to save – so we sacrificed to save – The reward a slow decrease in spending power as state pensions decrease – and no interest on savings

At the moment it pays to spend everything you earn and demand benefits.

I’m frankly disgusted.

Guest

Perhaps we should make our wills leaving everything to the government and ‘spend ourselves to death’ leaving a massive negative equity!

Guest

well, that answers the question of why they want us to save then. Bar stewards. Kicks every other con into touch.

I agree, it is disgusting.

Guest

Actually terfar – I’ve done something similar but not for the government. I gave all my savings to my children some years ago – directly I found the long term care would mean my entire income and “wealth” would vanish – no state pension – no savings – no house – At about £30,000 a year it wouldn’t take long before I would be a pauper after a lifetime of saving in a Welfare State.
My mother spent 12 years in long term care – My father 10 years.

I also gave my house to my children – I rent it back at peppercorn rate and pay upkeep out of my state pension. The worse that can happen to the house is inheritance tax – far far less than the entire amount. So I am now technically a pauper already and cannot pay for long term care,

Sadly Knowing this appalling “government” they would simply ignore the will.

Guest

some good, some bad. Why the wish to merge Nat. Insurance and tax rates? – as a pensioner this would increase my effective tax rate by more than 50%, and it would not help those in work either. Plus it would increase the incentive for tax avoidance practices. To simplify matters, why not cancel the ceiling on NI contributions? – those with more pay more.

Guest

They have said that they will not force NI onto pensioners. However, I agree that those who can should pay more. So they should scrap NI for both employers and employees. Employers should be forced to pay their contribution to the employees.

Then they should adjust the tax rates and tax bands so that the low paid (including basic paid pensioners) will benefit whilst those on MUCH higher income (including those on high pensions) will pay proportionally more.