Yesterday Chancellor Alistair Darling announced his first budget report, but what do these changes mean for your finances?
Yesterday saw Alistair Darling deliver his first Budget report with few surprises. It was, in his own words, "a responsible budget that will secure stability in times of global economic uncertainty" and one not unlike a balancing act as while the Chancellor gave with one hand, he took away with the other.
As with any budget there will inevitably be winners and losers, however many have been left scratching their heads as to which side of the fence they fall.
Unsurprisingly tax featured rather heavily in the Chancellors report but perhaps not in the way he had hoped as, despite his confirmation that the basic tax rate will drop by 2% in April, the media focus has very definitely been on his other revelations.
Most notably the tax on alcohol is set to rise 2% above inflation for the next 4 years with increases of 4p per pint on beer, 3p a pint on cider, 14p on wine and 55p per bottle of spirits effective this year. The tax on a packet of 20 cigarettes has also been raised by 11p.
The chancellor announced major plans to reform vehicle excise duty with so called ‘gas guzzlers’ (cars emitting more than 255g of carbon dioxide per Kilometer) being placed in a new tax band that will see owners of new high-pollutant cars paying £950 in their first year of ownership. Those that drive cars in the lowest tax band will however be exempt.
There was some good news for drivers though as the expected 2p rise in fuel duty has been postponed to October this year.
Pensioners are set to benefit from this budget with the winter fuel allowance increased to £250 for those over 60 and to £400 for those over the age of 80. Additionally, those on pre-paid fuel meters will get a better deal in 2008 with energy companies now required to spend £150million on social tariffs.
Darling’s budget also set out reforms to the housing and council tax benefit system that will mean families currently claiming benefits will be better off if they return to work after October 2009. Child benefit is also set to increase to £20 for the first child in an attempt to raise more children out of poverty.
Plans to build 70,000 new homes were announced along with proposals to make long term fixed mortgages a more attractive option for first time buyers. Additionally, stamp duty will no longer be payable on shared ownership houses until the occupant owns 80% of the property and key workers will now be able to release equity from shared ownership schemes.
The environment also featured heavily in the chancellors report with £26million allocated to making homes greener and regulations introduced that will see all non-domicile new builds carbon neutral by 2019. Plans to levy a compulsory charge on supermarket plastic bags were also confirmed as was the abolition of air passenger tax, to be replaced with a flight tax .
All in all the chancellor acknowledged that these were economically uncertain times, downgrading his forecast for growth to between 1.75% and 2.25% and confirming expectations that inflation is set to rise throughout 2008. However, he seemed optimistic that inflation would return to its 2% target in 2009 as world fuel and food prices stabilise.
For now though, many of us will be left waiting and wandering whether this budget means we will be left out of pocket.
