Darling’s Budget offers few smiles for the wealthy.
Personal allowances for people with incomes over £100,000 will be gradually eroded over the next three years. Anyone earning more than £150,000 a year will be hit with the new 50p rate of tax. It means the UK is now the second most expensive place for big earners, behind Italy. A quarter of these people live in the capital.
Darling will not scrap the one per cent increase in national insurance, which will come into force in April 2011. Inheritance tax will be frozen at its current threshold of £350,000 for a further four years, despite hopes it would be raised.
Higher rate tax relief on pensions will be gradually removed for those earning over £130,000. He also said he will remove tax on interest charges on late contributions made by employers. He clamped down on pension schemes that indulge in unauthorised borrowing by tightening up the rules.
Savers will see Isa limits increasing in line with inflation each year. Darling had already hiked the upper limit from £7,200 to £10,200, of which £5,100 can be held in a cash Isa. If the government’s inflation predictions are correct it means the Isa limit will increase to £10,400 next year. These changes will come in on 6 April.
Child tax credits will increase by £4 a week for each child aged one and two years of age. The chancellor increased the threshold for the maximum child tax credit payout to £16,190. He also claimed it will be made easier for people aged over 60 to claim working tax credit, as part of a wider drive to encourage people to work for longer.
In a bid to curb what the Treasury sees as unnecessary welfare payments, expensive properties will be exempt from housing benefits. Critics have accused Darling of pandering to popular opinion in a move that will save little money.