Darling pledges help for young and old
In his 2010 Budget, the chancellor Alistair Darling announced a raft of policies designed to help families as the UK economy continues to “emerge from the deepest global recession in over 60 years.”
The inheritance tax threshold will remain frozen for a further four years to help pay for the care of older people. Currently IHT is not paid on any assets under the value of £325,000, and tax of 40% is payable on the amount over this threshold.
The chancellor praised the flexibility of the tax credits system in providing 440,000 families with an average of £38 extra per week since the start of the recession. Darling said this was instrumental in “compensating families for loss of income due to shorter working hours and part-time working”.
In a bid to help older workers, the chancellor says the government would make it easier for those over 60 to receive working tax credit by reducing the number of hours they needed to work to be eligible.
From next month, the weekly state pension increase of £132.60 will also go into effect. This compares to £62 a week back in 1997 when Labour came to power. From April next year, the personal allowance for older pensioners will also increase, meaning no one over 75 will pay tax on the first £10,000 of income.
Also aimed at the pensioners vote, Darling guaranteed winter fuel duties for the coming winter. These were temporarily increased two years ago to £250 and £400 for the over-80s and will remain the same through 2010-11.
Opposition leader, David Cameron, recently criticised Labour for lying to pensioners about Tory policy toward winter fuel allowance, free bus passes and free television licences. It emerged Labour MPs had produced leaflets detailing Conservative Party plans to scrap these initiatives.
To pay for his continued help to pensioners and families, Darling said he would use extra revenue collected through closing tax loopholes and cracking down on tax evasion.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.