The Budget

I’m glad that measures have been taken to make it easier for young people to buy their own homes, our generation were so fortunate in that respect.

Jane43

I’m glad that measures have been taken to make it easier for young people to buy their own homes, our generation were so fortunate in that respect.

Yes, I agree. And they are the ones who will be paying for this pandemic for many many years to come. He was right to give them some positivity.

We all knew it wouldn’t be an easy budget, given the amount of money that has been paid out during the pandemic. Goodness knows how the books can be balanced.

It seems, from watching a report from the Joseph Rowntree foundation that it will be the poorest in our society who will have the equivelent of taxation this year.

The Government’s decision to cut Universal Credit and Working Tax Credit in six months – just as the furlough scheme ends and unemployment peaks – will pull 500,000 people including 200,000 children into poverty as we head into winter.

The OBR’s latest forecasts show that unemployment is expected to increase by a further 500,000 people between now and the peak towards the end of the year. Despite that, the Government has chosen to cut the main rate of unemployment support to its lowest level since 1990.

There is much more and I will put the link at the bottom but, for instance, why are they doing nothing about rent arrears and the threat of eviction while they are extending the Stamp Duty Holiday and launching a 95% mortgage scheme?

Elsewhere questions are being asked about why so many are still left out of the self-employment support scheme and why the changes are being made to the Minimum Income Floor for the self-employed claiming Universal Credit next month while they are holding off for so long to bring in Tax Changes.

Surely we should all be able to expect our Insured Benefits to pay out when the time comes for us to call on them and this constant tweaking should be a thing of the past - the Victorian past.

www.jrf.org.uk/report/jrf-spring-budget-2021-analysis

www.jrf.org.uk/press/jrf-responds-chancellors-spring-2021-budget

Do you remember paying for the war? I don't and once we have moved passed Covid being in control to our Health and Care system being in control (having been given nothing in this budget) then it will be sorted over time making as little difference as the war did during our lifetime. My hope is that they actually learn something about public services needing to be strong - I don't see any evidence though, I am afraid.

In Victorian times the very wealthy put their hands in their pockets and funded communities - hence so many undesirable statues. Putting slavery controversy to one side for this suggestion. It would be good if Rishi Sunak opened a fundraising page on just giving for his fellow billionaires and other modern philanthropists to dig deep right now. we could all donate what we could afford. The deficit could vanish this way instead of inflicting it on future generations. And if everybody did give what they could afford it should leave some for a recovery programme.
Rishi likes to think he thinks outside the box but they don't like to ask the rich to pay more.

I feel that much of what is given to business is necessary at the moment to keep them ticking over. Once they are open again I suspect that much of what is still going to be given (or rather not taken because of reduced Corporation Tax) will be used to look after the directors and management, with just a trickle to employeers, shareholder and hence to pension funds.
To me it would seem fairer if everyone benefited by increasing the Personal Allowance for basic rate tax rather than giving companies the opportunity to increase already inflated management salaries.

PippaZ

Do you remember paying for the war? I don't and once we have moved passed Covid being in control to our Health and Care system being in control (having been given nothing in this budget) then it will be sorted over time making as little difference as the war did during our lifetime. My hope is that they actually learn something about public services needing to be strong - I don't see any evidence though, I am afraid.

I remember paying basic rate income tax at 35% back in 1970 and the highest rate was over 80% for a long time so we were paying for borrowing in that way

Kim19

I'm going to request a replacement card without the contactless facility. I always have enough time to enter my pin.

I'm not sure if you can do this, I tried a couple of years ago without success. I've been using it contactless recently but would prefer a "normal" card without this facility.

Oops typo 1980

Oh yes Katie59 the good old days high taxes for all and exorbitant mortgage interest rates. Good for anybody with savings though!

MaizieD

Saetana

The tax allowance freeze will not come into force until after the 2022 rise in allowances. So its not going to affect anyone this year, or even next year. And, to be fair, the personal allowance for basic rate taxpayers has gone up quite a bit in the last few years.

Sorry? Are you saying it's rising this year and next? According to my paper this year's rise (April 2021 -March 2022) will take place but nothing after that until 2026.

Why shouldn't it have gone up 'quite a bit' in the last few years? Should taxpayers be thankful for small mercies? Will that make them accepting of an unnecessary personal allowance freeze? It all sounds a bit patronising to me...

Yes, just this year's increase, then no more until 2026. If the allowance is frozen after this year the real value will be decreased by inflation every year until 2026 - and we are expecting inflation to rise.
Increasing the basic rate allowance is a good way to encourage people to work by taking less tax from them - though I don't feel the same about the higher rate tax allowance which could be kept at the same level to take more tax from the better paid.

Now that the details are beginning to be read and understood, the budget is coming in for a lot of criticism.

OFR say it is untenable.

There are still 2.5 million (even with the new extension) who have not and will not receive a penny piece. I know. I am one of them!

Barrygirl

There are still 2.5 million (even with the new extension) who have not and will not receive a penny piece. I know. I am one of them!

Sorry this refers to the comment about the Chancellor not liking self employed folks!

and we are expecting inflation to rise.

Who are 'we', Saetana? How much do 'we' expect inflation to rise by and 'why' should it rise?

And if the value of the basic rate tax allowance is eroded, how does that help the tax payer?

Increasing the basic rate allowance is a good way to encourage people to work by taking less tax from them

But it's not being increased, is it? It's being frozen for four years. People 's full pay increases will be taxed, instead of part of them. They'll be paying more tax.

Which of us is confused?

GrannyGravy13

Oh yes Katie59 the good old days high taxes for all and exorbitant mortgage interest rates. Good for anybody with savings though!

Well, for all the 'high taxes' and exorbitant mortgage rates my then OH, a very junior researcher, and I, lower management in NHS (and I mean 'lower') managed to afford to buy a house as prices in the 70s still bore some relationship to earnings.

I can't remember the last time I had any cash in my purse. The £100 contactless limit is great for me. One step nearer to a cash free society. This is how the future will be I hope.

Grannyrebel, I have cash in my pocket now. You can’t get into a toilet without 20p and although I can pay for parking with my card, in some places, if you don’t have cash, you have to ring a number to pay and it adds between 20 and 50p to the cost of parking.

MaizieD

^and we are expecting inflation to rise.^

Who are 'we', Saetana? How much do 'we' expect inflation to rise by and 'why' should it rise?

And if the value of the basic rate tax allowance is eroded, how does that help the tax payer?

Increasing the basic rate allowance is a good way to encourage people to work by taking less tax from them

But it's not being increased, is it? It's being frozen for four years. People 's full pay increases will be taxed, instead of part of them. They'll be paying more tax.

Which of us is confused?

I'm the one who said "Increasing the basic rate allowance is a good way to encourage people to work by taking less tax from them" and I'm NOT saying that this is what is happening but that this would be better than what is being done. I don't think that eroding the value is a good thing, I think that increasing the basic rate tax allowance would be a better move.
I am certainly not confused, not am I Saetana nor MaisieD to whom I am responding.

Aepgirl and Jane43

I sometimes wonder whether people read the previous comments on this thread. I and others have explained how the borrowing came into being and how dealing with the deficit is not akin to housekeeping.

Katie59 The basic rate was actually 33% but that is neither here or there. What you have omitted to say is that mortgage interest and pension premiums obtained tax relief at the highest rates. In 1974 the marginal rate on earned income was increased to 83% to which was added 15% investment income surcharge. These rates applied to incomes in excess of £20,000. (the equivalent in 2019 was £209,963) So the richest would effectively have 98% of the interest on their mortgages paid by the state. These rates really applied to the very rich. Most people were not being taxed at that level.

Thatcher favoured indirect taxation so whilst she reduced the tax rates, she also reduced MIR to the basic rate. She also removed tax relief on life assurance premiums and the married couples allowance.

In 1983 MIRAS was introduced with an allowance of £25,000. This was soon increased to £30,000 each and unmarried couples could pool their allowances. In the 1988 Budge, Lawson announced that he was ending this in August of that year. This announcement lead to a rush to beat the deadline and is generally accepted as being the cause of the sharp rises in house prices in that period. Gordon Brown eventually got rid of MIRAS.

Income tax reductions went hand in hand with cuts to public spending. Spending on public housing collapsed to almost zero between 1976 and 1982 and has never significantly exceeded 1% since then. Benefit rates have fallen relative to earnings since 1979. Investment in public projects has also fallen since 1979.

Seeing as how some people won't accept information unless references are provided - the above elating to 1979 onwards came from a document entitled "Long Term Trends in British Taxation and Spending" for the IFS. The remainder came from a search of the income tax archives.

GrannyGravy13

Oh yes Katie59 the good old days high taxes for all and exorbitant mortgage interest rates. Good for anybody with savings though!

Hopefully I have dispensed with some of your ideas about taxation. Now for mortgage interest rates. In January 1972 the rate was 7.44%. The rate fluctuated between that and 9.86 in October 1978. In November 1978 it was 10.11% and had risen to 16.32% in April 1980. The highest was 17.82% in 1981.

It's interesting how the highest rates were under Thatcher's govt.

That’s what we pay our accountant for Dinahmo

I am certainly not confused, not am I Saetana nor MaisieD to whom I am responding.

I do apologise, cc. It was definitely me who was confused

GrannyGravy13

That’s what we pay our accountant for Dinahmo

Perhaps he didn't explain things to you very clearly because high taxes and high mortgage interest rates didn't go hand in hand as you implied in your post.