Budget break down in simple terms

This is a very quick summary of the main changes as they affect our clients. The UK Chancellor of the Exchequer, Alistair Darling delivered his Budget for 2009 on Wednesday 22nd April.

Savers

The increase in the annual ISA allowance to £10,200 from April 2010 will be welcome news – those of us aged 50 and over can start making the additional contributions from October this year.

Pensioners

There was an increase in the savings limit for pension credits (raised from £6,000 to £10,000) and a 2.5% increase in the state pension next year. Higher level winter fuel payments will also be extended for another year.

Homebuyers

The extension of the £175,000 stamp duty threshold has been extended until the end of the year. This is an attempt to restart the housing market.

Businesses

For businesses struggling with cash flow, the chancellor has extended the assistance (which allows loss-making companies to reclaim taxes on profits made in the last three years) until November 2010.

But the big losers in this budget were definitely higher earners with the Chancellor announcing three measures which, although anticipated, were more severe than expected.

• An increase in the rate of income tax to 50 % for those on incomes above £150,000 from April 2010.
• A reduction of the personal allowance for those with incomes over £100,000.
• A restriction on pension contribution tax relief for those earning more than £150,000 with the current 40% higher rate relief being tapered down to 20% from April 2011.