Budget 2016: what do you think?

budget 2016

The Budget delivered some wins for our campaigns – a pensions dashboard commitment, action on nuisance calls, and plans to unlock mobile phones. So what do you think of George Osborne’s announcements?

The headlines might come in the form of a bid to tackle sugary drinks with a new sugar tax on soft drinks or the new ‘Lifetime Isa’ to help savers under 40.

However, there were a number of other key announcements. So we’ve pulled together some of our highlights for you.

Win! A pensions dashboard

In a win for our Better Pensions campaign, the Treasury has announced plans to deliver on our call for a pensions dashboard. Our research recently found that over a third of people approaching retirement age find it difficult to keep track of their pension pots. With the introduction of auto-enrolment for workplace pensions, more and more of us are going to be juggling multiple pension pots.

We called for a pensions dashboard system to be introduced to house all the information necessary to help savers make informed decisions about their retirement choices. The Government has committed to the launch of the dashboard by 2019.

Win! Nuisance calls

Another win came in for our nuisance calls campaign, in the form of a commitment announced by the Chancellor to clamp down on rogue claims management companies (CMCs) that bombard people with nuisance calls. Also, in support of our call to make management of CMCs personally accountable for malpractice, George Osborne announced plans to introduce mechanisms that will ensure that CMC managers can be held to account for the actions of their business.

Win! Mobile unlocking

The Chancellor confirmed in the Budget that the Government will consult on ending the practice of locking phones after your contract has ended. And it has committed to consulting on this by the end of this year. He added that the Government welcomes voluntary commitments from mobile phone providers, but added that it is ready to introduce legislation if necessary.

Financial advice

George Osborne made a number of announcements on financial advice. The Government will consult on a clear definition of financial advice which will aim to remove regulatory uncertainty and ensure that financial advisory firms can offer you the help you need. Also there will be an increase to Income Tax and National Insurance relief for employer arranged pension advice from £150 to £500.

The Chancellor also announced that the Government will consult on introducing a Pensions Advice Allowance. This will allow people before the age of 55 to withdraw up to £500 tax free from their defined contribution pension to redeem against the cost of financial advice. The exact age at which people can do this will be determined through consultation. This means that a basic rate taxpayer could save £100 on the cost of financial advice.

Help to save

Plans for a ‘Help to Save’ scheme were announced. This scheme will be open to employees on in-work benefits, such as tax credits, who put aside £50 a month and would then receive a bonus of 50% after two years, worth up to £600.

What are thoughts?

Another year, another Budget. Are any of today’s announcements welcome news for you?

Philip Tory says:
17 March 2016

✔ I would really like to see State Pensions paid MONTHLY, not four-weekly. ✔
➜ ALL my outgoing bills are monthly, and if the pension arrives at an awkward date, it makes it hard to keep cash flow under control.
➜ Can we have a sanity check on this? To the Pensions dept computer, it’s just a small matter of programming.
➜ What does everyone else think?

David Laing says:
17 March 2016

My state pension is paid weekly by my own election. Would this resolve your issue Phillip.

chris says:
17 March 2016

i get my state pension weekly . i prefer this method .

I quite like the 4-week state pension. With my occupational pension arriving at the end of each month, calendar, it’s nice to have the state pension occurring at intermittent times during the month. Does anyone else agree with me, or is Philip supported more?

I sort of agree with both Philip’s original comment and Robin’s response. When I first started getting the State Pension, I also found it awkward and annoying trying to combine 4-weekly payments with monthly expenses. However, after a couple of years of dealing with this, I now find that (a) I also like the fact that the State Pension payment moves forward a couple of days each month and (b) by considering my 4-weekly payment as a monthly payment, I get the bonus of a ‘double’ payment in one calendar month. Swings and roundabouts.

I get my state pension every 28 days, that is how it has always been with myself. My wife though does get her state pension weekly.

Why should your preference take precedence over the wishes of others. You could take the time to write to the Pensions authority and ask them to change your frequency of payment.
There is a practise called “Budgetting”. Indulge.

Valerie Neil says:
18 March 2016

I like it paid 4-weekly as four times a year we get two payments in the same month!

demeter says:
18 March 2016

it works for us, because of the occupational pension, but it is easy to see that if someone is dependent soley on the state pension, 4 weeks is a pretty stupid arrangement, everything else is monthly.

As a pensioner living on the income and capital from savings I welcome some of the measures, although the capital gains benefit is unlikely to have any value with the current market conditions. The previously announced simplification of dividend income might make my tax return simpler! The increase in the ISA limit is helpful as I try to convert all my savings into shares ISAs, which makes life much simpler as well as reducing the tax liability. I am still liable for tax on both my small personal pension as well as the State pension, although my total tax bill might be a little less as the tax free element rises.

I wish the government would stop sending so much of tax payers money to foreign countries instead of taking care of the people they should be taking care of.

Ruth Nicholson says:
17 March 2016

Hi June I’m in total agreement certain countries don’t need foreign aid, if India can pour money in to a Space race,then they can afford to pay pay back in to the infrastructure & the people of India.We are tired of this Government shafting people like us.They are Robin Hood in reverse, steal from the poor to give to the Rich.

The Government are absolutly wrong to send any monies to foreign countries, they are robbing the uk people, this money is paid in by the people of the UK to benefit the uk not other often corrupt countries just so some smart ars politition can get credit for pulling the wool over the eyes of the UK people to say look what i’ve done taken from the mugs of the uk again.

I entirely agree, Joseph, there are more billionaires in India than any where else in the world. W hy should we subsidise any other country when we have people in this country depending on food banks.

I agree with this comment charity begins at home the government need to get their act together and only give were it is needed. The government need to realize that it is the tax payers money they are dealing with and not their own???

I agree, but only in regard to the monies being spent on interfering in the way peoples in other countries choose to live their lives and the way they choose to change the way their lives are being affected by the Government(s) they, the citizens, are under the power of. The UK Government would do better to negotiate access to the assets of other Countries instead of trying to grab them by force.

you are absolutely right, June!
“aid to Africa” is criticised by the Africans themselves.Working in Nigeria a while back, I was left in no doubt about this, They said it was demeaning,patronizing, and politically manipulative. (Blatant interference in their politics) When I had some free time I paid to go for long drives in the country to Aba, Onitsha, Enugu, Badagri, Abeokuta and etc and I saw NOBODY starving! My drivers were very chatty and pointed out many times overseas aid was just “neo colonialism” at work with money being taken from poor people in “rich” countries by lefty “do gooders” – modern Mrs Jellabies, if you like – to be handed out to rich people in “poor,starving,Africa” . (Coming from Murtila Mohammed airport one day on the way into Lagos, the driver said “do you know how much money Ibrahim Babangida is worth? I said I didn’t. “He is worth 25 billion!
I said “25 billion nairas?” The driver replied “No, I mean dollars!”)
There is a Zambian economist, Dambisa Moyo you should find out about, she had a run in with both Bob Geldof and Bill Gates and out argued both of them! She maintains that food aid especially just puts African farmers out of business!

JImbo says:
17 March 2016

The projected £500M “sugar tax” is a trivial sum of money – each MONTH we give away twice that sum in overseas aid. It is designed as a sop to ordinary folk and a headline grabber.

Why penalise the public? Penalise the Drinks Manufacturers according to the volume of harmful sugars in the drinks.
More importantly, encourage the Parents of children with fat/obese Children to encourage their Children to exercise

If the manufacturers have to pay the tax they might not increase the price of the sugary drinks but spread the price rise over all their products, including the more healthy options. But I’m not sure how effective the tax will be because many are happy to pay for expensive ‘energy drinks’.

It is important to encourage parents of all children to cut down on sugar consumption, even if they are skinny. Very skinny kids sometimes become obese adults.

Exactly, we should be weaning people off sugary, highly profitable, drinks – including the so-called energy drinks like RedBull- for harming their health, and pocket. Forget the marketing, you don’t need them.

Hopefully the tax will appear on their products; I do not know the legality of spreading the cost but doubt it could work.

Mr Anthony says:
17 March 2016

I would have thought out of all the tax give a ways, he could have found some for the
disabled personal independence payments that will affect so many thousands of people.
this sum may not be much to him, but a life line to a disabled person!

I quite agree with this comment, he is hitting the disabled and others on benefits that are in need, and everyone must remember that ninety nine percent of benefits are frozen for four years, but prices will keep on rising constantly, yet Mr Osbourne and his cronies are getting loads of tax breaks so where is this fair to us all in this country, his friends the bankers almost brought the country to its knees why should the normal man in the street suffer like this !it is not fair at all! Supposed to be the forth richest country in the world?

A poor budget for a poor economy whose modest growth is largely driven by unsustainable increases in personal debt.

The failure to increase fuel duty by 2 or 3 pence at a time when an oil glut has made it over 20p cheaper, is evidence of Osborne putting Personal and Party ambitions above the Country’s needs.

The large reductions in Capital Gains tax are an unwarranted gift to the already wealth.

I could go on…. but too depressing.

I am not disappointed by the decision not to increase road fuel duty – in rural areas this is of vital assistance to people who have no alternative form of transport. It also helps small businesses to keep their costs down and I think the economy will be no worse off in the long run.

Every time there was a rise in fuel duty and prices the local authorities in rural areas were pressed to raise the maximum permitted taxi fares. Keeping the duty at the same level removes this threat.

I welcome the savings plans and the pensions dashboard – although I won’t be able to benefit from the new schemes. I fear that many people at which the savings plans are aimed will not be able to join in time to make a meaningful pot as they just don’t have the ‘spare’ money to tie up for years.

Well done Which? for your efforts to change things for the better and for keeping us informed. Keep up the good work.

I am a WASPI, I thought I would ask for all your help, all I want is the pension that I was promised all my working life, now I am expected to work until I am 65 years and 9 months instead of 60, if any of you are sympathetic to our cause please sign our petition, it would be greatly appreciated 😉

How do I sign your petition?

If I understand the budget correctly I would have had to pay 28% in capital gains tax when I sell a little house I currently rent out, but now I will only have to pay 10% as since I retired I have become a basic rate tax payer. If I were to sell it tomorrow I would make a £75,000 profit. Maths isn’t a strong point but 10% is £7,500 and 28% is £21000. That’s a huge difference! I got into renting property by helping my daughter move up the property ladder and she couldn’t sell it for the price she needed so I bought it and rented it out intending to sell it when house prices improved. However, it turned out to be so lucrative, even though I rent it out for well below the market rate, that I kept it. Why on earth would anybody think it is better for me, who is already comfortably off, to gain by this amount while cutting money for the disabled. Surely cutting capital gains tax wasn’t in the Tory manifesto, nobody was expecting it to happen, so why was it thought so much more important than the welfare of the disabled? I only have one small property, can you imagine what profits those with bigger portfolios are going to make? How is this morally right?

This comment was removed at the request of the user

And CGT doesn’t apply only to residential property but to most assets that appreciate so this really is a golden give-away and could potentially enrich lots of people. Presumably, and I haven’t heard or read this part of the Budget speech, the thinking is that if gains are relieved of high taxes it will improve the liquidity of capital and generate more worthwhile investment. It might, or then again it might not – it’s a bit of an experiment.

From what I heard on the news today, there is no planned “cut in the money for the disabled”, indeed total expenditure is forecast to rise, but the redistribution of the money through the PIP asessment process will leave significant numbers worse off although other recipients deemed more needy, and people with new entitlements, will be better off. Ever since the Community Charge [poll tax], Conservative governments have always come a cropper on how to allocate welfare resources and, in their desire to improve equitability and rationality, always manage to leave a needy group exposed and deprived. The Spare Room Subsidy [“bedroom tax”] was another classic example. I blame the civil service really – they should spot these pitfalls at an early stage and steer the government away from them. The minor amount of money involved is usually out of all proportion to the distress and outrage caused, and the dogmatic intransigence when they apprehend their blunder only serves to compound the hurt. Whether we like it or not, we have to recognise that certain state benefits have become untouchable; years ago galloping inflation could be used to quietly smooth away these ‘anomalies’ but the government being saddled today with minimal inflation levels needs to develop a more sophisticated and sensitive way of managing these aspects. The theory behind it is sound in a philosophical sense but its practical application is crude and uncaring. It is bad politics to leave detriment and can usually be avoided.

T Burgess says:
18 March 2016

Sorry, are you actually serious? These poor misguided politicians don’t know what they are doing and it’s all the fault of the civil service. Come on your IDS aren’t you? Next you will be telling us that it’s true 75% of people really do thank IDS for being sanctioned and having their meagre support taken away from them. Apparently it’s an opportunity they welcome. The reason why spending is going up is because IDS has wasted untold millions pushing people through a system that is not fit for purpose as he did with Employment Support Allowance, and the projected numbers that would be found not to be disabled have failed to materialise. Guess what because Parkinson is incurable and people can’t grow back limbs. This is not redistribution to the ‘most’ needy it is a certain death sentence for many many disabled to be added to the already many deaths caused by this out of control ideological party.

T Burgess – The politicians certainly have to take responsibility for creating this points-based Personal Independence Payments scheme which was undoubtedly developed in the Department of Work & Pensions under Ian Duncan-Smith’s direction. In principle I can see some merit in it, but they probably did not explain it properly to, or consult on it with, the representatives of disabled people in order to understand the consequences of introducing such a formulaic method of determining benefit payments. Thinking up things like this is what the DWP does and is there for. My criticism of the civil service is that when the scheme was wheeled round to the Treasury for implementation under the 2016 Budget somebody should have analysed it a lot more carefully and noticed that the Chancellor would be walking into a mire if he pushed it forward in the raw and detrimental state in which it had been prepared. Perhaps the mandarins were so fixated technically on achieving their fiscal and budgetary objectives that they could not see the human side of the measure.

A few hours later . . .

The back-tracking has already started and I cannot see this proposal proceeding now. The education secretary has apparently described it as merely “a suggestion” which is disingenuous to say the least. This was indeed a very well worked-out policy that was delivered as part of the Budget and ministers were publicly defending it during the rest of Budget day.

T K Nair says:
17 March 2016

Pensioners should not be TAXED I pay 20% tax if they give more! They take it. Back. On Tax then what’s the point of the Budget giving us any extra cash?

The basic rate tax threshold will be at or above the state retirement pension level. Keeping 80% of any extra income is not a bad result surely – it’s the best I can remember in my lifetime.

Mark Avery says:
17 March 2016

I feel for the genuinely sick and disabled,their benefits should not be cut,they should be helped.Is it because there are not of lot of them relative to the population,that the chancellor can persecute them,shame on him and Ian Duncan Smith.It could happen to any of us folks,don’t forget that!

I know of a person with disabilities that receive various allowances that total nearly £12k per year, plus heating allowances, rent, water rates and council tax paid. With tax, pension, NI on top this would equate to a salary of approx £23-24k and travel expenses out of this, plus work clothes. This person has surplus money often and can save £2-3000 a year. I saw recently in the media that the average salary in the UK is £25k.

I think some people with disabilities get a lot of money.

The chancellor of whatever party on budget day is not going to please everyone there will always be winners and losers. I think this was a safe budget (excluding taking monies from the disabled) and Mr Osborne clearly has an eye on becoming the future P.M and is worried about Brexit.
Personally I was pleased that there was no increase in full duty (keeps motoring costs down as well as the price of goods in the shops) and having recently retired I am pleased about next years tax free allowance being raised by a further £500. However despite his best efforts this will not influence my decision on voting to leave the EU in June which will see UK money staying in the UK

What really saddens me is being part of a culture that takes money away from the disabled so richer people can have more, that is not a caring society. Politicians and the likes dream these budget proposals up with the slightest thought or consideration for the people that will ultimately suffer.

The increase in tax thresholds is welcome – 40% tax hits many families and only receiving 60% of what you work hard for is not exactly rewarding.

We will always have limited public funds – from our taxes – to spend on, for example, the NHS, schools and benefits. So it needs spending carefully. We need to get much better at targeting those who really need benefits; your money and mine should, for example, be supporting the disabled depending upon the consequences of their impairment and on those unable to work depending upon their circumstances.

What I find still unacceptable is the disparity between those on public service pensions that are heavily subsidised by the taxpayer – earnings related and in many cases far better than many private sector employees can aspire to – and those the rest of us get by on (or not). It is time pensions, private and public, were put on exactly the same basis with us all having the opportunity to pay in the same way, with employers paying in the same way, no NI breaks, and the pension that results coming from a similar scheme based on contributions, not final salary. We might then find civil servants working harder to provide a system that is fair to all.

Malcolm you have written that post like one has to pay 40% of one’s entire earnings in tax once over the 40% threshold. . i.e. if your earn 50K you will pay 20k in tax. . .
This is not the case
One has to make around 11k before one pays tax
Then one pays tax of around 20% on earnings between 11k odd to the 40% threshold
Then anything above the 40% threshold attracts the 40% levi not the entire earnings

D L J Bridges says:
18 March 2016

A really sensible idea. All of us should have some of our pension invested in the infrastructure of the country. Our airports, major toll roads and rail schemes, schools and hospitals rather than such things as PFI’s or Arab investments. That include everyone, civil servants, teachers, NHS workers and doctors et al. This would concentrate the minds of everyone to pull their weight for Great Britain and no one else.

DeeKay, sorry -not meant to read like that. I assumed most would understand my meaning – that when you earn more than the threshold – £43000 – you will only get 60% of the extra (instead of 80%), forgetting NI.

Can you remember “supertax” at 19/6d in the £1?

I think pension tax relief has been missed – but maybe that will follow in the next budget. I am in favour of a single rate of 20% relief for all on their pension contributions, up to a cap. It will not stop people contributing more if they wish to and can afford to ; just they will be saving from taxed earnings like the rest of us for something that will be of future benefit to them.

Yes, but you are not taking into account that civil servants pay is much less than the private sector.

Avril, it may have been once, but not any more. rosaltmann.com/public_sector_pensions.htm
If this is to be believed, the reverse is true. Some “rebalancing” called for perhaps.

I think the disparity in public service pay is a myth, Avril.

Public sector administrative and professional workers in the middle and lower grades are usually on higher salary scales and more favourable conditions of service than equivalent private sector staff, plus they usually get annual increments as well as an annual pay award, and their pension schemes are heavily subsidised by employer contributions charged to local or national taxation. Moreover they are on national pay scales which generally pay the same across the nation ignoring regional variations found in private sector pay with the exception of staff in London and certain metropolitan areas who actually get a top-up, or ‘weighting’. The thirty-five hour week is normal across the public service and any extra time is generously compensated at enhanced rates. Their pension is based on the best of their last three years at a high ratio based on years of service and is index-linked t inflation with death grant, survivor benefits and other enhancements. Redundancy schemes in the public sector generally out-class those in the private sector and all these schemes are completely copper-bottomed with a perpetual guarantee and no risk of default or underfulfilment, the costs being secured against the public purse. One rarely hears any public sector workers complaining about their package [junior doctors excepted who probably do have a legitimate grievance about the way they are being treated if not about their remuneration].

Steve Hopkins says:
21 March 2016

I think there is some truth in both points of view. Currently there is probably little difference in most public and private salaries. But public sector salaries have only caught up in recent years and the private sector is now squeezing its employees more (including poorer pensions). For most of my working life public sector pay was poorer and one of the conditions for settling pay negotiations at less than inflation was that pensions would be better funded, so the benefit was delayed. This also used to happen in some of the private sector before final salary schemes were closed. Now that the pension promises are having to kept I can understand that it looks unfair, but I’m afraid it is an example of government again taking short term gains for a subsequent government to sort out (student fees and the new pension ISAS are just another example of that). Now that public sector salaries are closer to parity, almost all the current pension schemes have been changed to be less generous, require higher payments longer contributions and are not tied to final salary.

This was reported in the DT Oct 2014:
“The true scale of the gulf in pay that separates private and public sector workers is revealed today in an report that includes the impact of “gold-plated” pensions for the first time.
Workers in the state sector received a fifth more than counterparts at private firms when pensions were factored in, according research published by the Institute of Fiscal Studies.
The think tank said teachers, doctors, nurses and other state employees received an average of £28,000 a year, while private workers received £27,000.
However, generous pensions added £6,000 to public workers’ pay, boosting the total to £34,000 a year.
By contrast, the pensions offered to private workers added just £2,000 a year, giving £29,000 overall, the report found.”

They say a week is a long time in politics, but Osborne must be feeling that about yesterday alone. IDS’ surprise resignation suggests the planned Disability cuts may now be placed on the back burner – if they’re ever brought out again in their current form. Meanwhile, it would also suggest the Budget will have slightly more than a bumpy ride when the details are voted on in the commons. We live in interesting times.

I think that plan is in the bin now, Ian; it won’t see the light of day in this Parliament.

I read more about the details of the measure today and it really was a wolf in sheep’s clothing. I think the CGT changes might come under the microscope now more than they would have done and the Treasury will want to get something back for its humiliation. Their fiscal benefit was dubious and they mainly served a political purpose.

The pity here is that all we see is the headlines – like “disabled benefits cut”. One commentator pointed out that the current points system has a drawback that was being addressed. It seems one objective was to ensure that if a disability caused a continuing financial problem then an appropriate benefit was paid to compensate. However, if a capital item were purchased – an appliance for example – that overcame that problem the current system still pays an ongoing benefit even though the financial problem was no more. So this anomaly was being removed. That seems fair to me. Now it may be that any sensible reforms will be lost.

What I find continually frustrating is that instead of running the country our politicians indulge in childish acts and point scoring. No more so than here.

Moving on . . . The insurance industry has become a regular cash cow for the Chancellor and another hike in Insurance Premium Tax by over five percent [from a 9.5% rate to 10% from April 2016] was quietly slipped into the Budget. Competition via the internet in the industry has undeniably brought down premiums [with reductions in cover in many cases as well unfortunately] so the Treasury sees an opportunity to keep piling more taxes on an essential purchase – and a compulsory one in the case motor insurance and inescapable in the case of mortgaged property and most foreign travel. I don’t know whether insurance costs are included in any of the cost of living indices but the tax must be having an impact and leading to people not taking out optional insurance [e.g. house contents] or buying reduced cover policies which leave them exposed if they suffer a major loss.

i received my state pension recently and was disappointed on what i received. i have almost 40 years of N.I. contributions . i was told i was contracted out because i have a works pension. Its the first time i learned about this after receiving a letter from the Dept. of Pensions. I call it a devious con.

If you were contracted out you would have been paying reduced NI contributions.

Pat – Are you saying you don’t have a works pension? If you do have one it might put you in a better financial position than just having the state retirement pension. Maybe you were not told that you were paying your state pension contributions at the contracted-out rate, or perhaps you did not realise what that would mean when you reached retirement age.

With the state pension scheme there is no direct link between the amount paid in and the pension paid out in later life; its the contribution record that counts and it would seem that you have a full contribution record, albeit at the contracted-out rate, so you should be getting the maximum state pension that your circumstances allow.

If you are not receiving your occupational pension you should chase that up as a matter of urgency.