Newsletter 6
Case Study 1 – The Budget 2009 – Main Announcements
Last week, Alistair Darling set out his vision for the years and decades ahead. It was certainly followed with great interest by more people than usual.
There are some staggering figures being bandied around at the moment. A couple of billion here, a couple of billion there….
Here we look at the main announcements in the budget, covering Mortgages, Pensions, ISAs, Regulation, Employment and Taxation.
Thanks to the Association of Mortgage Intermediaries (AMI), who has compiled this summary of the main announcements. The AMI has greeted the Budget with mixed feelings, as have most people, agreeing that to avoid a new ‘Great Depression’ we needed to bail out financial institutions, whilst accepting that this saddles us with a huge amount of debt in the medium term.
Mortgage and Housing Finance
- Close to £1 billion investment in the housing market
- Extension of stamp duty freeze on properties up to £175,000 until 2010
- £500 million to kickstart stalled housing projects
- Scheme to guarantee mortgage backed securities to boost lending
- £80 million extension of ‘HomeBuy Direct’ - the Government shared equity mortgage scheme announced,
- £50 million to accelerate the modernisation programme for army housing
Financial Regulation
- The Chancellor is to publish a discussion paper on financial services regulation, which will cover proposals for the reform of corporate governance, capital and liquidity requirements, increased transparency proposals and actions to reduce the impact of the failure of financial firms.
- The Government will also bring forward the proposals regarding the accountability of the Financial Services Compensation Scheme and the Financial Ombudsman Service.
Pensions
- From April 2011, tax relief on pensions contributions will be restricted for those with incomes of £150,000 and over, and tapered down until it is 20%
- Legislation in this year’s Finance Bill will prevent people front loading their pension contributions now in order to avoid the change, whilst permitting individuals to continue to receive tax relief at the higher rate on the higher of £20,000 or their normal pattern of contributions.
- The Government will raise the capital disregard in Pension Credit, and pensioner-related Housing and Council Tax Benefit, from £6,000 to £10,000 in November 2009.
ISAs
- For the tax year 2009 - 2010, the annual ISA investment limit will increase for everyone aged 50 and over.
- Individuals will be able to save £10,200 in their ISA, up to £5,100 of which can be saved in cash.
- To allow ISA providers time to adjust their systems, deposits above the current ISA allowance can only be made from October 2009.
- The Government will extend these increases in the ISA limits to everyone from 6 April 2010.
Taxation
- From April 2010, an additional rate of income tax of 50% will apply to income over £150,000
- The income tax personal allowance will be restricted for those with incomes over £100,000.
Jobs and Unemployment
- A shorter working week and flexi working hours will increase Tax credits to compensate for loss of income for the unemployed Government support to protect 500,000 jobs (as announced in the January Employment Summit)
- Those under 25 out of work for over a year will be offered a job or place in training
- An additional £1.7 billion of funding for Job Centre Plus and New Deal (in addition to £1.3 billion announced in 2008)
- £250 million funding to help people get work experience in growth industries
- £260 million of new money for training and subsidies to help young people gain skills and work experience
- Funding for local authorities and partners to take forward the creation of 100,000 new jobs in socially useful activity
- Creation of an extra 54,000 student places in sixth form education
For more information on how The Budget 2009 will affect you, please do contact us.
For more information about how Payment Protection can help you cover your Mortgage, please Contact Us.