Q: What’s happening on income tax?
A: From April 2012 George Osborne is going to raise the personal allowance again, to £8,105. This measure, coupled with last year’s rise, will take 1.1 million low-paid people out of the tax system altogether.
Next April the personal allowance will go up again, to £9,205. The Chancellor said: “Millions of working people will be better off by £220 every year, and because higher earners will also benefit, 24 million people earning less than £100,000 a year will gain from this measure.”
Q: What about the 50p rate?
A: This is going to be reduced to 45p from April 2013. George Osborne said the 50p tax rate only raised £1 billion a year, only a third of the amount expected.
Advertisement
Q: I’m a first-time buyer. Any help for me?
A: Not much. The Chancellor did not extend the Stamp Duty holiday for first time buyers purchasing homes worth £250,000 or less. However he is expanding the Get Britain Building Fund that provides upfront finance to construction firms.
Q: What’s happening on expensive homes?
A: The Chancellor is imposing a 15 per cent Stamp Duty Land Tax on residential homes worth more than £2 million which are bought using a corporate ‘envelope’ to avoid the normal stamp duty charge. The measure will take effect from today.
He is also looking to introduce an annual charge on £2 million plus homes already sheltered in such a corporate structure.
Advertisement
Finally he is bringing in a 7 per cent Stamp Duty rate on ordinary purchases of residential homes.
Q: Will I pay more for my petrol?
A: No further changes to fuel duty are planned.
Q: What about cigarettes and alcohol?
A: The average price of a packet of cigarettes is expected to rise by 37p a packet. The Chancellor was slightly misleading when he said there would be no ‘additional’ tax on alcohol so beer, wine and spirits. In fact from March 26 beer will go up by 3p a pint, wine by 11p a bottle and spirits by 41p a bottle.
Advertisement
Q: What’s happening on pensions?
A: The Chancellor announced that next month the basic state pension for a single person will rise by £5.30 a week to £107.45. He also plans to merge the basic pension with the state second pension to create a larger single pension which would, on current estimates, be worth about £140 a week. More details will be provided later this spring.
But he also said that he plans to freeze the age-related allowances currently given to pensioners aged over 65 and to abolish them completely for new pensioners reaching the age of 65 on or after April 2013. These allowances are currently worth £9,940 for those aged between 65 and 74 and £10,090 for those aged 75 or over.
The idea is that the value of the standard personal allowance for those aged under 65 will rapidly overtake these other allowances and replace them, thus simplifying the whole system.
The Chancellor is also going to review the state pension age to ensure that it keeps pace with the increased longevity of the population.
Advertisement
Q: Any good news for owners of small businesses
A: Not a massive amount. Mr Osborne confirmed that £20 billion of funding at low interest rates will be available to small businesses through the National Loan Guarantee Scheme, but this had already started operating the day before the Budget.
Q: Is there anything for savers and investors?
A: Very little. Mr Osborne barely mentioned them.
Q; What about green measures?
Advertisement
A: Again not much. Mr Osborne said the Green Investment Bank was opening for business next month but added the warning that: “Environmentally sustainable has to be fiscally sustainable too.”