Budget 2012: winners and losers
Budget 2012: Winners
- Low to middle-income earners – The rise in the personal allowance to £9,205 from April 2013 will mean the average basic-rate taxpayer will be £220 better off a year.
- Middle-income parents – The gradual phasing out of child benefit for those earning more than £50,000 is an improvement on the initial proposal to scrap it for any families with a higher-rate taxpayer.
- Members of the Armed Forces – An extra £100 million is to be spent on improving military accommodation. Personnel serving overseas will also receive 100% relief on the average council tax bill. In addition, the family welfare grant has been doubled.
- Broadband users – Osborne has pledged an extra £100 million to improve the speed of broadband across the country, creating ‘super-connected' cities.
- Cyclists – Transport for London is set to receive an extra £15 million to improve cycle safety across the capital.
- Rail users – The Chancellor has announced plans to upgrade the TransPennine route between Manchester and Sheffield and further improvements to the lines between Manchester and Preston, and Manchester and Blackpool.
- Drinkers – The rise in the alcohol duty remained unchanged. This means it will increase by 2% above inflation. Not great, but it could get a lot worse after the imminent publication of the government's Alcohol Strategy.
- Small businesses – Simplification of the tax return process will relieve an administrative burden on small firms. A new £20 billion National Loan Guarantee scheme will also provide discounted loans to companies with revenue of less than £50 million.
- Businesses – Corporation tax will be cut to 24% from next month, and to 22% by April 2014.
- Pensioners (although in the losers section too) – The state pension is set to be simplified into a single-tier state pension set at around £140 a week and based on contributions.
- Young people – Enterprise loans set to be introduced later this year for those wanting to set up their own businesses.
- Home builders – Extra funding to go to help construction firms build new homes.
Budget 2012: Losers
- Higher earners – 300,000 more people will be drawn into the higher rate 40% tax band as the 2013/14 threshold is reduced from £42,475 to £41,450.
- Higher-income families – Child benefit will be phased out if someone in a household has an income of over £50,000. It will fall by 1% for every £100 earned over £50,000. While those earning over £60,000 will lose the benefit completely.
- New pensioners – The age-related personal income tax allowance is going to be removed for new pensioners from April 2013. It will be replaced with a single personal allowance for all. HM Revenue & Customs estimate that this will leave 4.41 million people worse off in 2013/14 with an average loss of £83.
- Future pensioners – The state pension age is going to be automatically reviewed to make sure it keeps pace with increasing longevity – so we're all going to be retiring later and later.
- Wealthy homeowners – Stamp duty on property purchases worth more than £2 million will rise to 7% from midnight, meaning anyone buying a house of that value will have to hand over £140,000 to the taxman.
- Shop workers – Set to work longer Sunday hours during the Olympics after Osborne announced an extension of the Sunday trading laws for eight weeks starting from 22 July.
- Smokers – Tobacco duty will rise by 5% above inflation from 6pm tonight adding 37p to the average pack of cigarettes.
- Banks – The bank levy is being increased by 0.105% from January 2013 to make sure banks don't benefit from the corporation tax cuts.
- Motorists – The much hoped for reduction in fuel duty hasn't happened leaving motorists facing soaring petrol costs.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).