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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 a