25 November 2008 11:10:18
|How the Pre-Budget Report will affect you|
There will be a £25 increase in the basic rate tax benefit from £120 in tax year 2008/09 to £145 in tax year 2009/10. This will be a permanent change.
Britons with incomes above £150,000, or around 1% of the population, will pay 45% tax from April 2010, up from 40%. This will only come into effect if Labour wins the next election.
People earning over £140,000 will no longer receive a personal tax allowance. Britons earning between £100,000 and £140,000 will see their personal tax allowance reduced to the same received by a basic rate taxpayer.
There will be a 0.5% increase in National Insurance contributions by April 2011. However, Britons earning under £20,000 will not be affected by the increase.
As of Monday 1 December VAT will drop from 17.5% to 15%. This change will last for 13 months, until the end of 2009, and will then revert back to 17.5%.
As a result, duty on alcohol, tobacco and petrol will increase to counter the reduction in VAT.
Major lenders yesterday agreed to give homeowners in financial difficulties a three-month “grace-period” to sort out their situation before repossession proceedings will begin.
Struggling homeowners may benefit from a range of options that the banks have agreed to look into, including accepting minimum repayments towards mortgages.
The Mortgage Interest Scheme, set up to help homeowners who have lost their jobs, will now cover homeowners with properties worth up to £200,000. This means the ceiling for the scheme has doubled from £100,000.
The level of interest rate covered by the scheme will stick at 6%, even though the base rate has fallen to 3%.
Those with a second mortgage will now be covered by the Government’s mortgage rescue scheme.
A panel will be set up so that lending levels to households and businesses can be monitored.
An extra £15 million will be provided by the Government for free debt advice to any Briton that needs it.
As part of the Savings Gateway scheme, which will be offered by some banks and the Post Office, the Government will give almost 8 million low-income savers 50p per £1 put in their savings accounts.
Gas and Electricity
The Government announced it will be forcing energy companies to cut gas and electricity prices to reflect the reduction in the cost of wholesale energy. Failure to comply could result in Labour introducing statutory powers to reduce energy bills.
The Chancellor also said that an extra £100 million will be available to help people insulate their homes.
Road tax will rise by up to £30 for more polluting cars, instead of the £90 expected, but will decrease by up to £30 for cars that produce less pollution.