Money Doctor here!
With baited breath (and in Matron's case a large G&T!) the staff gathered in the lounge to watch coverage of Gordon Brown's last Budget (as he is likely to end up being PM before the end of the year!).
It's one of the few times (other than Grand National Day and the FA Cup Final) that the entire staff of the Money Hospital is gathered in one place! Mortgage Matron, Night Nurse, Plastic Surgeon, Bones, and Finance Physician all jostled for prime position on the sofa in front of the ever unreliable portable TV to watch the hilarity unfold!
In the Budget good old Gordon gave his strongest signal yet that he is ready to fight the Conservatives in an election, stealing their thunder by adopting a number of their policy pledges (the best ideas are often borrowed we say!)
However, the figures underlying the Budget imply that Gordon plans to take back almost precisely the amount he will give out to families and businesses through extra taxes and the removal of certain allowances.
Hmmmm...maybe we should take a closer look at the bare bones of the Budget?
Some industry experts say that we will pay more income tax/ National Insurance as a result of this latest Budget. Those on the highest incomes (£20,000 - £40,000) will gain from the 2p tax cut but lose from the move to bring the upper threshold for national insurance contributions into line with that for paying the 40p income tax rate.,
In his Budget response, Conservative leader David Cameron said Mr. Brown was "the chancellor who has taken one tax down but put 99 up" and also told him that average families were paying £1,300 more "because of your Budget decisions".
So with furrowed brow and much chin stroking, all of us here at the Money Hospital have tried to slim down Gordon's Budget into the key points for you all:
INCOME TAX
- Basic rate of income tax to fall from 22p to 20p from April 2008
- Lower starter rate of 10p to go, meaning all those who pay income tax will start at 20p in the pound - (meaning little difference likely to take-home pay)
- Threshold for higher rate income tax to increase from £38,000 to £43,000 in April 2009
CIGARETTES AND ALCOHOL
- Beer will rise by 1p a pint from midnight Sunday, cider by 1p a litre, wine by 5p a bottle and sparkling wine by 7p.
- Duty on spirits will not change (Matron is very happy indeed!)
- Cigarettes to rise by 11p a packet (im not happy as I like the occasional woodbine) but then again if this helps you stop, think of all the money you could save!
TRANSPORT
- Fuel duty up 2p a litre this year (deferred until October) then up 2p next year and 1.8p in 2009
- And as we suggested it might happen, a 30% increase for top band vehicles (4x4s, MPVs, larger engine cars) to £300 this year, £400 next year (Finance Physician will suffer thanks to his 3.2 litre Jaguar!)
- The least-polluting vehicles (Band B cars) 30% cut in road tax from £50 to £35
- Lowest emission cars stay at zero tax
FAMILIES
- Child benefit, for a first child, will rise from £17.45 a week to £20 a week by 2010.
- The £40-a-week in-work bonus paid to lone parents to be extended to their first 12 months in work.
INHERITANCE/CAPITAL GAINS TAX
- Tax exemption for capital gains will rise from £8,800 to £9,200, and will be £18,400 for married couples.
- Inheritance tax will threshold to rise from £285,000 now to £350,000 in 2010.
SAVINGS
- ISA tax free limit to go up 20% from £3,000 to £3,600 in April 2008
PENSIONERS
- Tax-free allowance for pensioners under 75 will rise in three stages from £7,280 to £9,770 in 2011.
- For over-75s, the tax free allowance will rise annually from £7,420 to by £10,000 by 2011.
- Grants of between £300 and £4,000 for pensioners installing insulation and central heating in their homes.
- All the 125,000 people who lost their pensions because of company insolvency will get help with a financial assistance scheme increased from £2bn to £8bn.
EDUCATION
- Some 50,000 16 to 17-year-olds who sign activity and learning agreements to receive a training wage in return for gaining skills.
- Education spending in England will rise from £60bn this year to £74bn in 2010.
- From now to 2010 spending per pupil will rise by a further 20% to £6,600.
HEALTH
- Investment in the NHS in England to rise by £8billion this year; the biggest cash increase ever (naturally all of us here at Money Hospital are happy!)
ENVIRONMENT
- Increase in green grants for homes by 50%
- Until 2012, homes worth less than £500,000 with zero carbon rating will be exempt from stamp duty
- Higher tax rates for landfill and quarrying
- Reduced duties on biofuels and biogas extended
GOVERNMENT SPENDING
- New £80 million fund for charitable efforts in local communities
- The security budget will rise to £2.25 billion, with an extra £400 million for the armed forces
So does this year's Budget mean you are winner or a loser?
Are you happy with Gordon's last hurrah or has it left a bitter taste in the mouth? (like the canteen food here...)
The diagnosis from us here at the Money Hospital is that although the Budget looks good on the surface, it may not prove that beneficial once you do your sums.
And if you want to know how better or worse off you are why not use this handy Budget Calculator?: