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Budget Update – The Media reactions

Posted on: June 24th, 2010
Categories: Financial Advice

The Emergency Budget was always giong to cause a media frenzy, and the newspapers didnt disappoint. In this blog post we aim to take the reactions of various news site from across the marketplace and consolidate them into one place! The Telegraph, Times, Guardian and Daily Mail all followed their natural style of reporting, leading to some interesting viewpoints on the effectiveness of the budget.

The Telegraphs ‘Key Points’ centre around a budget that they call “exceptionally rich in measures, policies, changes in tone, figures and analysis,”. Their Key points were:

VAT to go up to 20pc from 17.5pc
Capital gains tax for higher-rate taxpayers rises to 28pc
Child benefit to be frozen for next three years
Two-year pay freeze for public sector workers
Basic state pension linked to earnings once again, from April next year
No new tax increases on alcohol, tobacco or fuel

They also offer a budget calculator.

The Times called the budget the ‘Axe and Tax Pact”. They offer an at-a-glance guide, where they describe give each point a number of axes to show the extent of the change. The axes tell the story of pain: one is ouch, five is excruciating.

Their headlines follow the theme with “‘VAT rise will hit jobs and inflation” and “Stealth switch will rob benefits” among them.

They offer a Q&A on how the budget might affect you.

The Guardian lead with ‘Budget 2010: Pain now, more pain later in Osborne’s austerity budget’, while the Daily Mail headline reads ‘Middle classes WILL suffer most: They’ll be hit twice as hard as wealthy, despite Osborne’s claim that we’ll all share the pain’.

But what does this all mean? With help from Scottish Widows we’ve compiled a short synopsis of the main points from this weeks emergency budget.

VAT

will rise to 20% from 04.01.2011

Income Tax

The basic personal allowance will increase to £7475 from 06.04.2011.
The basic rate limit will decrease by £2500 based on current estimates of the RPI (Retail Price Index) – exact figures to be announced in September 2010
The long term objective is for the basic personal allowance to reach £10,000

Capital Gains Tax

A new rate of 28% for individuals who’s gains and income exceed the basic rate limit. This applies as of 23.06.2011

ISA’s

From 06.04.2011, ISA contribution limits will rise annually by RPI

Child Trust Funds

The Government plans to phase out Child Trust Funds

State Pension

From 06.04.2011 the basic state pension will increase by the higher of RPI, CPI or 2.5%

Tax Credits

From 06.04.2011 Child Tax Credit and Working Tax Credit will increase by CPI rather than RPI
From 06.04.2011 the Baby element of the Child Tax Credit will be removed.

Corporation Tax

The main rate of coporation tax will decrease by 1 percentage point per year for the next 4 years. (down to 24%)
The starting rate of corporation tax will drop by 1 percentage point as of 06.04.2011

National Insurance