Donna Werbner explains who are the winners and losers in this week's Budget!
Donna Werbner explains who are the winners and losers in this week’s Budget!
The new Government has just announced its first Budget. So who were the biggest winners and losers?
The winners
The biggest winners are the lowest earners. The personal allowance on income tax will be increased by £1,000, so that 880,000 of the lowest earners do not have to pay any income tax at all.
And at the other end of the spectrum, the Queen is one of the winners – her £7.9 million annual allowance, known as the civil list, will not be cut.
Similarly, businesses will be happy as the Chancellor has promised to cut companies’ corporation tax by 1% a year for four years and to increase the National insurance threshold for employers. Tax breaks will also be made available to anyone who sets up a business outside the south of England.
Disabled people will be given extra help, for example, they will get housing benefit for an extra room so that they can have a live-in carer. However, a medical assessment will be applied to new claimants for the disability living allowance from 2013.
Pensioners also got a boost - from April, the basic state pension will be rise in line with earnings, which should mean pensioners are better off. But those approaching retirement face working an extra year, as the state pension age is going to rise to 66 more quickly than expected.
Meanwhile, landline phone owners will be happy to hear the proposed landline duty has been abolished before it even came into force!
The losers
The biggest news is that VAT is set to rise to 20% from 4 January next year.
Capital Gains Tax will also rise to 28% for higher rate taxpayers, but will remain at 18% for basic and lower rate taxpayers.
That’s it for the tax hikes – what about the spending cuts?
In this context, parents are some of the biggest losers. For example, Child Benefit will be frozen for the next three years. The health in pregnancy grant is also to be abolished and lone parents will be expected to look for work when their youngest child goes to school. And the Government has already announced it is scrapping Child Trust Funds in January.
Public sector workers are also big losers – those earning over £21,000 will have their pay frozen for two years.
And those claiming benefits will feel the squeeze as well. Housing benefit is set to get an overhaul with caps on the maximum amount councils can pay out. For example, councils will not be allowed to pay more than £400 a week for a four-bedroom house.
A bank levy will also be introduced in 2011, on UK banks and the UK operations of foreign banks which generate two billion pounds in annual revenue.
For more details about the budget and how you can avoid some of the tax hikes, visit lovemoney.com slash expert help!