Business

BUDGET 2008 & ITS IMPACT ON YOU

By Francisco Esteves ⋅ March 13, 2008 ⋅  Print this post ⋅ Post a comment

The Chancellor, Alistair Darling, finally unveiled his budget yesterday, which the Conservatives branded a ‘bad news budget’ due to the many announcements of ‘cutting targets’ and ‘economic strapping down’. With the economic growth (the speed at which the economy will grow) revised figures of 1.75% - 2.25% and an increase in borrowing of £43bn, it is not surprising that people are feeling uneasy about the future.

The simple mention of the word ‘budget’ can send many people running. But the fact is that the Chancellor’s announcements and policy changes will affect everyone in society. So right here at LX News, we’ve summarised all the key pointers which you should know about, as they will directly affect you in the next couple of years.

Personal Tax & Savings (changes come into effect from 6th April 2008 ready for the next tax year)

• Lowest rate of Income Tax (tax you pay on your wages) of 10% has been abolished, meaning that if you pay tax, you will pay at the new rate of 20% (which has fallen from 22%).
• You can earn up to £2,231 before you start getting taxed, at the 20% rate.
• If you’re thinking of saving, ISA accounts are the best option. You will now be able to put away £7,200, of which £3,600 can be in cash.
• For those students with children, Child Benefit for the first child goes up 70p to £18.80 and for every other child, 45p increase to £12.55.

Alcohol and Tobacco (changes come into effect on 17th March 2008)

• Bad news for drinkers I’m afraid. A pint of beer will cost you an extra 4p, a bottle of wine an extra 14p and a bottle of spirits an extra 55p from Sunday night. These prices will then increase every year for the next four years, by 2% above inflation.
• Cigarettes too will cost you more, with 11p new tax imposed on them. This will mean you’ll have to spend an extra £2000 keeping up the habit next year.
• Good news for those of you thinking of quitting though. VAT has been dropped from 17.5% to 5% on nicotine replacement products.

Motoring and transport

• Good news for students who commute. The proposed 2p increase in fuel tax has been postponed until October.
• Road tax, however, will cost you an extra £5 next year and the Vehicle Excise Duty for the most polluting cars increases by £100.
• The Chancellor also announced a “showroom” tax, which will be applicable to new vehicles that emit more than 130 g/km for the first year.

Entrepreneurs

• A mixed bag of announcements for small businesses. Capital gains tax has been increased from 10% to 18%, meaning if you sell up, you will have to pay more tax on whatever gain you made.
• Good news for women entrepreneurs though, with an extra £12.5m fund to encourage them set up business.
• An extra £60m will also be put into the small firms’ loan guarantee scheme, which all small businesses will be able to apply to.

And finally, the Environment

• Following the announcement that Marks & Spencers will start charging for plastic bags, the Chancellor announced that if enough wasn’t done by budget time next year, he would be imposing a charge for every plastic bag used.
• Airplane tax will increase by 10%, meaning it will cost you more to go on your holidays.

What do you think of the latest changes? Do they go too far or not far enough? Let us know by commenting below!