Thursday, 22 March 2012

Budget Offers Tax Cut for The Rich and Hits Pensioners

By Ben Aulakh

The Chancellor George Osborne has scrapped the 50p top rate of tax for those earning more than £150, 000, while freezing the personal allowance for pensioners on low incomes.

The reduction in the upper tax rate from 50p to 45p is expected to mean that around 300, 000 people on the highest incomes will be £40, 000 better off this year.

The freezing of the tax free personal allowance however, below the rate of inflation, is expected to take more than £1.25 billion out of the hands of those over 65.

Changes to child tax credits will also mean that those on low incomes will lose on average £900 in the coming financial year.

The Chancellor had increased the basic state pension by £5.30 a week, to £140; however it’s expected that the freezing of the pension allowance will offset this increase.

The budget did also include a capping on tax relief for those on high incomes, and a doubling of the stamp duty to 15 per cent of the value of properties costing more than £2 million.

However these top end tax increases will affect fewer than 2000 people, while more than 24 million are expected to lose out as a result of yesterday’s budget announcements.

Mr Osborne also refused to cut fuel duty in the face of rising oil prices; while an extra 5 per cent – 35p – was added to the price of a packet of cigarettes.

The Office of Budgetary Responsibility also downgraded their growth forecast for the bcoming year from 2.5 per cent to 0.8 per cent; while unemployment was estimated to peak this year at 1.67 million.

The Chancellor also announced borrowing figures of £126 billion for the coming financial year, with this figure estimated to drop to £120 billion next year.

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