28 April 2009 10:10:00
|The Budget in a nutshell.|
The dust has settled on what has been labelled the most important Budget of modern times and the political posturing has begun - but what does the Budget really mean for consumers?
A new class war?
Perhaps the biggest talking point was the new 50% tax band for people earning upwards of £150,000 - a "pathetic piece of class war posturing", according to Conservative leader David Cameron. High-earners will also lose some of the tax relief on their pensions from April 2011.
The effect on your pocket
Most consumers will be more concerned with the everyday issues. Alcohol tax went up by 2% - about a penny in the pint, although some trade bodies have suggested the figure in real terms could be closer to 5%. Tobacco tax has also seen a 2% rise, equating to an extra 7p on a pack of 20 cigarettes.
However, the increase in fuel duty could well be more of an issue for consumers. An extra 2p per litre will come in from September, followed by an increase of 1p a litre above inflation each April for the next four years.
Perking up the property market
All these tax hikes are an attempt to boost the government's coffers - severely drained from the full effects of the credit crunch. Another victim of that phenomenon has been the property market and the government has tried to get this area moving.
A new scheme to guarantee mortgage-backed securities has been brought in, which government boffins believe will help mortgage availability. The stamp duty holiday on homes selling for up to £175,000 has been extended to the end of the year, while other government funding has been brought in to aid the construction industry and boost housing availability in the long run.
However, despite some alleged 'green shoots' in the property market, the latest figures from the British Bankers' Association - released today - revealed that mortgage lending fell for the first time in four months during March.
Green shoots - but not for the economy
People who are more concerned about global warming than the credit crunch will have welcomed some of the measures in the Budget. The new car scrappage scheme, which will see motorists receive a £2,000 discount on new cars if they trade in their older model, could see a few more environmentally-friendly vehicles on the road. A £435m package to help boost energy efficiency in homes, businesses and public buildings should also win the green vote.
Save the savers
Savers have suffered more than most during the downturn, with interest rates at their lowest in years. But the thrift-minded will be glad to hear that the annual limit for tax-free ISAs will increase to £10,200 for over-50s this year and for everybody else next year.
And the rest
In further good news for the older generation, the basic state pension will go up by at least 2.5% - regardless of inflation. Additionally, the winter fuel allowance will be maintained at a higher level for another year - £250 for over-60s and £400 for over-80s.
Job seekers out of work for more than a year have been promised extra support, while the child tax credit will rise by £20 by 2010. Child trust funds for disabled children will see an extra £100 annually, or £200 for the severely disabled.