On Wednesday, Chancellor George Osborne released his latest budget. Here is a summary of the main changes.
There was little in this budget for hard-pressed savers to cheer. Osborne said that the Bank of England would have “unconventional monetary instruments” at its disposal and a mandate that allows it to consider growth alongside keeping inflation under control. That translates for savers as low interest rates on savings accounts for some time to come.
There was one small bright spot, however – a consultation will be launched on allowing parents to transfer child trust funds to Junior Isas. As Danny Cox at Hargreaves Lansdown points out, this is a welcome move as “child trust funds have been in terminal decline since 2011, seeing millions trapped in expensive products or suffering lower interest rates than their Junior Isa counterparts”.
Motorists will like the announcement that the proposed 3p fuel duty hike in September will be scrapped. Beer drinkers got even better news as the chancellor has cut the rate of duty on a pint by 1p instead of raising it by 3p in April, as had previously beenplanned. The proposed annual inflation +2% rise in beer duty has been scrapped, but stays in place for wine, cider and spirits.
Low-earning taxpayers got a small concession; the proposed increase in the tax-free personal allowance to £10,000 will be brought forward by one year to 2014. And for families there is to be 20% tax relief on childcare costs of up to £6,000 per child from 2015. At the other end of the life spectrum, the proposed cap on care costs was confirmed – a £72,000 limit will kick in from 2016.
Meanwhile, first-time house buyers got a boost from the announcement that the government’s shared equity scheme will be extended for new-build properties – the government will provide interest-free loans for up to 20% of the value of qualifying properties. Guarantees backed by the state will also underwrite a whopping £130bn of mortgage lending for three years from 2014.
Lastly, pensioners will see the proposed flat-rate £144 per week pension brought forward one year to 2016 and anyone who lost money before 1992 in the wake of the Equitable Life collapse will be entitled to £5,000 compensation.