Families: Inheritance tax freeze puts squeeze on the family purse
Thursday 25 March 2010
The Chancellor highlighted his help for families in yesterday's Budget, but few will end up better off as a result of the changes. In fact, a new freeze on inheritance tax increases could end up costing some families a lot more than they may make through the more popular moves such as increasing tax credits and the stamp duty holiday.
Even the announcement that he is staggering the rise in fuel duty over the next 12 months will simply delay the financial pain for families already facing an increase in the cost of their weekly shop through extra tax on booze and cigarettes, being introduced from midnight on Sunday.
On top of the 2 per cent increases in wine, beer and spirit duties, some families will be hit by the 10 per cent increase in cider duty. Smokers are only slightly worse off with a 1 per cent increase in duty.
But families will also be hit by the new landline duty – the so-called broadband tax – of 50p a month and also have the 1p rise in national insurance contributions to look forward to from April 2011. So is there any good news?
Parents eligible for child tax credit were targeted by with the promise of a £4 weekly rise in the credit for those with young children aged one and two. But the rise will not come in until 2012, two years away. In other words the Chancellor's cash is aimed at prospective mums and dads, because any babies already born will end up too old for their parents to benefit from the increase.
Mr Darling, when announcing his headlining stamp duty holiday for first-time buyers, said he made the move because he was "determined to do more to help families take that crucial first step on the housing ladder". The holiday is available on homes worth up to £250,000, which could in effect save first-time buyers up to £2,500 in stamp duty. The Government claims the change will mean nine out of 10 first-time buyers will pay no stamp duty.
The Chancellor also announced he is extending the enhanced support for mortgage interest scheme for six more months until December. Under the scheme, struggling homeowners who cannot meet their mortgage payments after losing their job get government help with interest payments. In 2009, the scheme was revised so that homeowners who lost their jobs could claim after 13 weeks, instead of the previous 39 and the rate increased to 6.08 per cent from the previous base rate plus 1.58 per cent. Mr Darling said: "I will continue to pay this support at the higher rate for another six months."
He also said he will continue the additional payments alongside the winter fuel payment next winter, which is worth £100 more to households with someone aged over 80, and £50 more to households with someone over female state pension age.
Against these cash boosts families could be hit by the freezing of the inheritance tax nil rate band at its present £325,000 level for the next four years.
"The freezing of the inheritance tax band until 2014-15 could cost a couple an additional £37,000 in inheritance tax in real terms," warned Frank Nash, a senior tax partner at chartered accountants Blick Rothenberg. "We are not just talking about wealthy families, who will be hit. The Chancellor's plans will affect married couples or civil partners who are jointly worth more than £650,000. Taking into account the value of many family homes it means that hundreds of thousands of people will be hit."
The view from the marginals: 'I fear I won't be able to afford to send my children to university'
Kay Wilkinson, Mother
Labour majority in 2005: 2,180
The NHS is a big concern for me and I'm disappointed Alistair Darling hasn't spoken about it. I would have liked to have heard more about the plans for the future of the NHS. For example, the paediatrics ward at the local hospital is moving, and we're afraid that they are gradually trying to shut the hospital down.
I'm also disappointed they haven't spoken about university funding. One of my fears is that I won't be able to afford to send my children to university. We've put money in a trust fund for them, but even that is not worth much at the moment following the economic crisis.
I think the rise in ISA allowances is a good thing. My husband and I have a couple of ISAs and we try to fill our allowances.
In terms of the extent of public borrowing, there's not much I can say. I don't know what other options this country has got. However, I don't think the Conservatives would have handled the recession any differently.
I voted Labour in the last election as I have always felt Labour is more inclusive of the lower classes, while the Tories have been about the rich. However, I'm at the point of no-confidence following the expenses and cash-for-access scandals. I don't like David Cameron or the public image he works so hard at. I can't bring myself to vote Conservative, and the Labour Party is falling on its arse, so I'll look at my other options.
Did you know?
Budget Day is the only occasion of the parliamentary year when reply to a minister is not delegated to his shadow.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
The HiFX guide to international money transfers
Five Questions: Changes to car tax discs
A student's guide to financial survival: You don't have to drown in debt at university
Two million first-time buyers are locked out
How to save money: UK is crashing down the European league table for putting money away
- 1 Unseen Charlie and the Chocolate Factory chapter deemed 'too subversive' released
- 3 Joan Rivers: 'Palestinians deserve to be dead'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
£40000 - £70000 per annum + Bonus+Benefits+Package: Harrington Starr: C# .NET ...
£40000 - £70000 per annum + benefits+bonus+package: Harrington Starr: Data Ana...
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony