What the budget means for you
Chancellor, George Osbourne has today unveiled the government budget plans for the next financial year.
The budget paints a mixed picture for households as the economy tries to steer away from a double dip recession. In a bid to save the UK’s dire economy, the chancellor plans on reducing public debt and promises to take “millions out of tax”.
The chancellor also predicts that the unemployment rate will fall and inflation will also fall to 1.9% by next year.
Low income households
The chancellor has offered some respite for low earners as the income tax threshold will increase. This gives an extra two million people more financial leg-room before having to pay tax. Public spending will be reduced to comprise the new threshold.
This now means that Brits can earn up to £9,000 before they are taxed. This will affect a number of part time female workers and will come into practice next April. This move is being driven by the Liberal Democrats who wish to increase the personal income allowance to £10,000.
There will be an automatic review of the state pension age and they will give all pensioners a rise of £5.30 in line with inflation.
High income households
The chancellor also brings good news to those earning a higher income as the coalition will go-ahead with plans to cut the 50p tax rate on incomes over £150,000. Earners over this threshold will have to pay a top rate of 45p as of April 2013.
A new top rate on properties over the value of £2 million will be introduced and wealthy homeowners face a hike in the stamp duty from 5% to a massive 7%.
For both groups alcohol and tobacco will see steep increases. Over the last few years the duty has increased on these products. A packet of cigarettes went up by as much as 50p since 2010.
Tax on alcohol brings in an estimated £15 billion a year and consumption has fallen over the last five years resulting in a dry pool of funds from alcohol tax for the government.