Cider drinkers, smokers and the wealthy were the big losers from this pre-election budget, while the major headline-grabbing measure was a two-year stamp duty holiday for first-time buyers purchasing property under £250,000.
Wealthier people are now probably getting familiar with their role as Aunt Sally in the Budget jamboree. Not only do they face a welter of tax rises imposed in the pre-Budget report, all of which were re-confirmed in the Budget – including a new 50 per cent income tax on earnings over £150,000, cuts in pension tax relief, and the phasing out of personal allowances once an individual earns over £100,000, disappearing altogether once incomes reach £112,950 – they now have a whole new set of indirect tax changes to deal with. As well as a four-year freezing of the amount of money that can be left on death free of inheritance tax, currently £325,000, those buying homes for more than £1m will have to pay stamp duty at 5 per cent instead of the current 4 per cent.
In addition, those with complex tax affairs could find that schemes designed by their accountants to reduce their tax exposure are wound up by the HM Revenue & Customs as it closes tax loopholes to bring in an extra £500m. HMRC has also agreed with a host of offshore tax havens – including Grenada, Dominica and Belize, the home of Tory donor and deputy chair Lord Ashcroft – to obtain information on UK citizens holding money with them which could be subject to UK income tax.
But there will be few hearts bleeding for the super-wealthy among those desperate to get their first foot on the property ladder. Assailed by strict lending criteria and a market seemingly showing signs of renewed vigour, they will be happy to see a two-year stamp duty holiday for properties purchased under £250,000. The absence of first-time buyers – their numbers have shrunk by roughly two thirds over the past decade – has long been cited as a sign of a distorted market that's doomed eventually to fail. By granting the holiday, the majority of first-time buyers won't have to pay stamp duty. The Royal Institution of Chartered Surveyors reckons this will help transactions across the market, potentially pushing them above 1 million for the first time since 2007.
Savers also had reason for cheer as the Government confirmed it would raise the limit on Individual Savings Accounts from £7,200 to £10,200 in April and that in subsequent years the threshold will rise by the rate of inflation. This is the first time that ISA limits have been guaranteed to rise year in, year out. It is worth remembering that between the year of their introduction 1999, and 2010 the ISA threshold has risen by only £200 in total.
Those on low incomes and pensioners also had some minor fill-ups: an extra £4 a week for parents with young children in receipt of tax credits from 2012; a 2.2 per cent rise in the national minimum wage; and the extension for another year of the winter fuel allowance– no doubt welcome after one of the harshest winters in living memory. In addition, banks will be compelled to offer basic bank accounts targeted at Britain's estimated 1.75 million unbanked citizens.
Britain's beleaguered businesses will be disappointed that there was no change to corporation tax but they will have to make do instead with the promise of extra lending.Reuse content