Who's Pre-Budget?
The Chancellor Gordon Brown is fond of lists. Here is one he didn’t give in his tenth Pre Budget Report on 6 December.
Winter Fuel Payment will remain frozen at £200 for people over 60 and £300 for those over 80. There will be no repeat of last year’s £200 Age Related Payment to help with council tax. The Warm Front programme for insulating homes and providing central heating for some older people on low incomes will not be extended. The state pension will rise in line with prices, as it has since 1980. Tax allowances for the over 65s will also rise just in line with prices, bringing more into the tax net. The bands on Stamp Duty on homes will not change even though house prices are rising by 8% a year. When we drive in the UK every litre of petrol we buy will be taxed at 56.8p in duty and VAT, a rise of almost 1.5p. And holidays abroad will be more expensive as the tax on flights leaving the UK is doubled to £10 for flights to Europe and £40 to other destinations.
Inflation will fall to 2% by the middle of next year and stay there in 2008, but there was no mention of the higher rate of inflation experienced by many older people who have to pay rising council tax and fuel bills out of limited incomes. The Government has already told local authorities that they can raise council tax by 5% without incurring Government penalties. And at some point in the future we may have to pay a tax for every mile we drive.
It was hardly a Pre-Budget to lighten the hearts of people aged 60 or more.
So what about savings? That is something the Government has encouraged through tax-free ISAs and that many older people have taken advantage of. More than £200 billion is saved up in ISAs, most of it in cash. Surely there were some improvements there?
Well not really. We already knew that ISAs were going to be permanent (most of us thought they were anyway). That the daft mini/maxi distinction was going to go. That PEPs would be renamed ISAs (big deal). And that money saved up in a cash ISA could be rolled over into a shares ISA without losing the tax-free ISA status.
So far so good. But there was no proposal to let people move money from a shares ISA into a cash ISA, which would be sensible as you approach retirement to limit the risk of losing money you were hoping to live on.
And no announcement to increase the annual limits of what you can save in an ISA. So the £7000 total, of which £3000 can be in cash, remains. Perhaps he’s saving good news on that for the Budget in the spring. Let’s hope so.
Go back to Paul Lewis front page