 News
23rd March 2006
Budget 2006
Gordon Brown began the Budget this year by announcing that the last
chancellor to deliver ten budgets in a row delivered his last speech in
1822. But has Mr Brown got it right and what does it mean for you and
your family?
Education
Mr Brown said the most important investment in the future would be
in education and this has been reflected in this Budget.
Main points
- Over five years, investment in schools will rise from £5.6bn now to
£8bn a year
- The amount of capital funds for each state school pupil will be risen
to the level seen in private schools now - £8,000
- Further education would be free of charge for the first time up to
the age of 25, with adult learning grants to help with the cost of living.
- Mr Brown promised new help for working women, including doubling training
for women with low skills and addressing pay discrimination
What this means
The Chancellor's centre-piece for this Budget was a large increase in
funding for schools in England, including increasing the investment by
£3000 per pupil in state schools to ensure the same education for all
children. It hopefully means a better education available when your baby
starts school. Women are still paid less than men for doing the same jobs
and he plans to stop this discrimination by making a commitment to improving
the conditions and career choice of working women.
Family
Stating that this Budget was one to "invest in every child" Mr Brown
has again put money towards Child Tax Credits and the child Trust Fund.
Main points
- The child element of the child tax credit will rise by 14 per cent
over the next three years
- Child Trust Funds will get an extra £250 when the children reach seven
years old. Children from low income families will receive £500.
- Child care vouchers will increase by £5 a week by £55.
- Child benefit will rise to £17.45 a week from April.
What this means
It is hoped that working families on the lowest incomes receive more
help but all families should benefit from this Budget both now and in
the long term. Last December the chancellor announced that tax credits
would be more generous in 2006, rising in line with earnings but he has
put the child element slightly higher than that in a bid to help working
families.
Housing
In a bid to increase the supply of land the chancellor has said he will
make more public sector land available for house building. But will this
help young families get on the property ladder?
Main points
The starting point for Stamp Duty Land Tax is to rise from £120,000 to
£125,000.
Duty will now be paid at 1 per cent on properties worth between £125,000
and £250,000.
£970m would be set aside for shared equity schemes
What this means
160,000 new homes have been built in the last year. The money set aside
for shared equity schemes will help first time buyers get on the property
ladder by buying 'shares' in their home until they own it outright. If
you can find a home for less than £125,000 (up £5000 from last year's
Budget) then you will save the 1 per cent duty that a house of higher
value will incur.
Taxes
Main points
Personal tax allowance to rise from £4,895 to £5,035
The inheritance tax threshold to be lifted from £275,000 to £325,000
over the next few years, starting with a rise to £285,000 in the 2006/7
tax year.
Petrol duty frozen until September.
What this means
Not much. Personal income tax allowance and National Insurance contributions
have risen in line with inflation so won't make any difference to your
pay packet.
The rise in inheritance tax is still not as high as the rise in house
values so will continue to catch homeowners with increased IHT bills.
Sin taxes
Smokers are hit by the traditional rise whilst it's good news for some
drinkers.
Main points
- Cigarettes increase by 9p a pack (20)
- Beer increases by 1p
- Wine increases by 4p but no increase on champagne or sparkling wine
in anticipation of the World Cup!
- For the tenth Budget in a row, there has been no increase in spirit
tax.
What this means
If you smoke 20 a day you can expect to pay a further £32.85 on tobacco
a year. Wine and beer increases are standard amount for recent Budgets.
Travel
In a bid to make this Budget greener, the Chancellor has put increased
road tax on "gas guzzling" cars.
Main points
- Introduction of new car tax bands from A to G, ranging in price from
£0-120.
- No increase on fuel duty
What this means
It depends on what car you drive. Very low-polluting vehicles will, for
the first time, be exempt from road tax but at the other end of the scale
heavy polluting cars, such as some four-by-four vehicles, will be taxed
at a new higher rate of road tax, at £210 a year. The aim is to encourage
the use of the low carbon car market which will be in Band A.
Some 4x4s and 'Chelsea wagons' will be in the higher Band G and will
see their road tax increase to £210 per year.
In summary
Families and children in particular should gain some benefit from this
Budget, although could lose out if they own a car in a higher road tax
band. All in all, it hasn't proved particularly popular with the average
person. Pensioners in particular have received nothing more than a free
bus pass and key workers such as nurses and police won't benefit either.
Where to next?
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