What does the Budget mean for you?
24 seven talks to the experts at Dutton Moore Chartered Accountants and Business Advisers to decipher what the budget really means for the average household… With the economy in dire straits, many people were expecting to be hit hard by the Budget, but initially it appeared as though most individuals had got off fairly lightly. However, as so often happens, once the dust settled and the details were examined, it became clear that there was minimal good news for individuals and that millions of households will be worse off. Tony Bullock, joint managing partner at Dutton Moore, Silver Street, Hull, gives his round-up of the good, not so good and bad news for us all... The main victims are those earning over £100,000. Their personal allowances will be restricted and those with an income of £150,000 a year or more will be hit by a new 50% tax rate from next April. But it's not only the wealthy who are hit with the nation's finances in a mess of historic proportions, squeezing the rich isn't enough to plug the funding gaps. As a result, Alistair Darling had to raise the money he could from those traditional methods - tobacco, alcohol, bingo and fuel duty. While this will hit the majority of people, worst affected will be those on lower incomes, because proportionally the higher costs will eat into more of their income. Some good news... Thousands of pensioners will be better off from the autumn when the savings limit for pensions credits will rise from £6,000 to £10,000. The Government claims this will benefit more than half a million pensioners to the tune of around £4 per week. The higher winter fuel allowance, which was announced last year, to help offset rising energy bills, is to “The higher winter fuel allowance, which was announced last year, is to be maintained for another year.” be maintained for another year. This means the over-60s will receive £250 and the over-80s £400 to help towards their fuel bills. Parents with disabled children will also receive extra help. The Government will contribute an additional £100 a year to the Child Trust Funds of disabled children, while the severely disabled will receive £200 a year. As was widely expected a new car scrappage scheme was announced. “Anyone with a car that is at least 10-years old, that they have been in possession of for 12 months, will receive a £2,000 discount if they trade it in and buy a new car.” It is designed to boost the ailing motor industry by encouraging people to get rid of old vehicles and buy a new car. From next month, anyone with a car that is at least 10- years old, that they have been in possession of for 12 months, will receive a £2,000 discount if they trade it in and buy a new car. The scheme will run until March next year. Dealerships will arrange the rebate. However, this system could be open to abuse. From next April, the child element of the Child Tax Credit will go up. However, the increase will be just £20 per year, per child – less than 40p per week - so in reality this will not be of much help. While savers will benefit from a £3,000 increase in the annual ISA allowance, this will not take effect immediately. The annual allowance will rise from £7,200 to £10,200 (up to half of that can be invested in a Cash ISA, so that limit will go up from £3,600 to £5,100). The over- 50s will benefit from the higher allowance this year, but it won't take effect until October 6th. Savers under the age of 50 will have to wait until April 6th next year before they see their ISA limit go up. This delay has been heavily criticised by savers who have been hard-hit by the recent interest rate cuts and were hoping that the Chancellor would do more to ease their plight. In summary... The Chancellor's figures are based on the economy shrinking by 3.5% this year. However, he is forecasting growth of 1.25% next year and 3.5% in 2011. Many economists think these figures are widely optimistic. If they're right, brace yourself for a succession of nasty Budgets.
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