Family Finances |
|
Your Money > Family Finances Articles > How the budget...
|
|
By Moneywise team
Alistair Darling has delivered his second Budget report to Parliament amid a dismal economic outlook, rising unemployment and a deflated housing market. He said the Budget - which includes hikes in income tax and duty on fuel, alcohol and cigarettes - would help get people back into work and support business and homeowners amid the most serious turmoil for over 60 years. PERSONAL FINANCE HIGHLIGHTS * 2% increase in alcohol (from midnight) and cigarette duty (from 6pm) * Fuel duty to increase by 2p from September * New 50% rate of income tax for people earning over £150,000 * ISA allowance to increase to £10,200, of which £5,100 can be held in cash, from this year * New £2,000 car scrappage scheme * 15% rate of VAT extended until December * Stamp Duty holiday extended * Statutory redundancy pay will increase from £350 to £380 * Personal allowances scrapped for people earning over £100,000 * Tax relief on pension contributions scrapped for people earning £150,000 plus
BUDGET BREAKDOWN Help for the unemployed * Darling promised to ensure short-term job loss doesn't turn into lifetime of benefits. * Additional £1.7 billion of funding for JobCentre Plus * Additional support for people out of work for 12 months * From January, people under the age of 25 out of work for 12 months will be offered a place in training or employment. * Creation of 250,000 jobs for young people. £260 million of new money in training for young people and extra investment (£250 million this year and £400 million in 2010) to ensure people aged 16 and 17 can stay in education and training * Introduction of new scrappage scheme giving drivers £2,000 if they trade in old cars for new vehicles Housing * Stamp duty holiday extended until the end of 2009 * Mortgage Interest Scheme extended by six months * Introduce mortgage security backed guarantee to help banks lend * Invest £80 million to shared ownership HomeBuy scheme * Reduce restraints on new contruction to help meeting demand for housing * £500 million of support for house building firms to deliver 1,000s of new homes, including £100 million for 'green housing' * £50 million to modernise homes for people in the armed forces Pensioners and savers * From April 2011, people earning over £150,000 will no longer get tax relief on pension contributions * New 50% of income tax for people earning over £150,00 from April next year * People earning over £100,000 no longer receive personal allowances from next April "A quarter of all pension spend goes to the top 1.5% of the population," he said * Child poverty: from April 2010 £20 increase in child tax credit, and up to £200 extra to child trust funds for disabled children * Statutory redundancy pay will increase from £350 to £380 * Grandparents with caring responsiblities will now be able to use this towards their state pension * State pension will increase by 2.5% * ISA allowance will increase from £7,200 to £10,200, of which £5,100 can be saved in cash * Personal allowance for pensioners will increae to £10,000 from November this year * Winter fuel allowances will increase by £250 for the over 60s and £400 for over 80s * Crackdown on tax evasion "We've found loopholes that, when closed, will save £1 billion of extra revenue over the next three years," the Chancellor said Business * Automotive industry will benefit from new scrapage scheme giving drivers £2,000 if they trade in old cars for new vehicles * Allow loss-making businesses to reclaim tax on lost profit for the last three years until 4 November 2010 * Double main capital allowance to 40% - enhanced tax relief to support investment * Extra funding for digital investing, extending broadband network to everyone * £750 million investment fund to provide support for emerging technologies science to encourage export, research and development Public finances * Half budget deficit in next four years * Forecast 0.5% fiscal easing of GDP * £175 billion borrowing this year, £173 billion from 2010, £140 billion in 2011, £118 in 2012 and £97 in 2013 "We need to help people now," he said. "This is the best way to drive up economic growth." * Reduced rate of VAT of 15% will continue until end of 2009. It will then return to its previous rate of 17.5%. Economy * Expectation that the economy will start growing again before the end of 2009 "There can be no quick fix or overnight solution," said Darling. * He forecast that the economy would shrink by 3.5% during 2009 - in-line with predictions. 2010 will see 1.25% growth, he added, with 3.5% growth from 2011. In the pre-Budget report, Darling forecast a 0.75% - 1.25% slowdown in economic growth in 2009, with 1% growth in 2010. * Reform to regulation of financial firms, including banks * The world's first ever carbon budget to cut emissions by 34% by 2020
Useful links: |
| ||||||