Perhaps the most eye-catching announcement of Alistair Darling’s 2010 Budget was the move to raise the stamp duty threshold for first-time buyers.
For two years, the threshold will stand at £250,000, double its previous level. But to pay for the extra relief, the stamp duty charge on the sales of residential properties worth £1 million or more goes up to 5 per cent.
Despite lobbying from the business community, employee, employer and self-employed national insurance contributions will rise, as planned, by 1 per cent in April 2011. To make sure that those on lower incomes are not hit by the extra charge, the level at which NICs become payable will also go up in April 2011 by £570. This means that people earning less than £20,000 won’t face a hike in their NICs.
On income tax, the Chancellor made no new announcements. That means the top rate of income tax at 50 per cent for those earning £150,000 or more is confirmed for April 2010, along with the gradual removal of personal allowances for those earning over £100,000 (the rate of withdrawal is £1 for every £32 above the income limit).
The pre-Budget Report had already set up a one-year freeze on the inheritance tax allowance of £325,000. That freeze is to continue for the next four years until 2014/15.
The fuel duty increase, planned for next month, is to be phased in three stages – 1p per litre on 1 April, followed by 1p per litre on 1 October and the remainder on 1 January 2011.
From 6 April 2010, ISA limits increase to £10,200 for all savers, with up to £5,100 of that total allowed for cash accounts. The Budget announced that, as from 6 April 2011, ISA limits will rise in line with the Retail Prices Index. The RPI figure as it stands in each September will be used to establish the ISA limits for the next year. These limits will be rounded to the nearest multiple of £120 to make savings planning easier.
As expected, the government is to toughen up the penalties for tax evasion. Those penalties could now climb as high as 200 per cent of tax where there has been deliberate concealment of income or gains.
Cider drinkers were in for an unpleasant surprise. While the duty on beers, wines and spirits rises by 2 per cent on 29 March, cider will see a 10 per cent increase in order to bring its duty into line with other alcoholic drinks.