By Evie Purves
With most of the budget provisions leaked over the past few days, there were few surprises in Chancellor George Osborne’s speech.
Unsurprisingly, the top rate of income tax has now been cut from 50p to 45p which will come into effect in April 2013, meaning that millionaires will effectively pay less tax.
The HMRC found that after reviewing the effectiveness of the 50p tax rate, it has caused “massive distortions” and only raised one third of the £3bn which was their target.
But workers earning £20,000 a year would be £253 worse off from April, and families on the minimum wage who were unable to work more than 16 hours would lose nearly £4,000 as a result of changes to tax credit rules.
George Osborne says the treasury will receive “five times more money each and every year from the wealthiest in our society”. The UK economy is set to grow much quicker this year than previously forecast.
Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club has said this was “generally a steady, but business-friendly, Budget.”
But others strongly disagree, calling it “a budget for the rich” and stating that it is “outrageous”.
The chancellor also introduced a surprise penalty tax rate of 15% on properties held in offshore companies to avoid stamp duty as well as increasing stamp duty on homes costing more than £2 million.
Despite the rich being made richer, it seems that pensioners are being hit hardest. Osborne’s announcement to freeze the pensioner’s tax allowance will leave four million pensioners £83 a year worse off by 2014. Despite this, the chancellor still insisted that no one would be losing any money.
This new scheme will save the Treasury £360 million next year, £670 million in 2014, £1 billion in 2015 and £1.25 billion in 2016.
The blow to pensioners comes after it emerged this month that the cost of living for the UK’s 10.6 million pensioners has risen by a third since 2000.
The average retired couple spends £17,922 a year to live, up from around £13,500 at the turn of the Millennium.
Ed Miliband – leader of the opposition has dubbed the new budget as “a budget for millionaires” The Labour leader attacked the budget as “unfair, out of touch, for the few not the many”. It was based on the “wrong choices, wrong priorities, wrong values” from the “same old Tories”.
Landlord Jake Kelly says the budget is “ridiculous” and now has to cut his own staff hours “to be able to afford to keep this small pub open”.
Miliband snubbed the Tories budget plan and said “This budget will be remembered for its failure on growth and jobs and the top rate tax cut” and added: “Today marks the end of ‘we are all in it together’.”