Helping people fairly
Low inflation and interest rates mean many households will have higher real incomes in 2009. In addition, households have benefited from action that the Government has already taken to support economic recovery, including an increase in the personal allowance, and a temporary cut in VAT. However, the Government recognises that many households have been hit by the downturn, including those affected by rising unemployment or by falling hours or wages
Budget 2009 announces further Government action to support employment, to help savers and families with children, to support pensioners and to help people manage their finances, including:
- an additional £1.7billion set aside for the Department for Work and Pensions to sustain the high numbers of individuals currently moving off Jobseeker's Allowance in the early months of each claim and provide support for the minority who remain unemployed for longer periods;
- a guaranteed job, training or work placement for all 18-24 year olds who reach 12 months unemployed to ensure no young people are left behind due to long term unemployment;
- an additional payment alongside this year's Winter Fuel Payment, worth £100 for households with someone aged over 80 and £50 for households with someone aged over 60;
- an increase in the annual investment limit for Individual Saving Accounts to £10,200, up to £5,100 of which can be saved in cash. These higher limits will be available to people aged 50 and over from 6 October 2009 and available to all from 6 April 2010, directly benefiting over 5 million people who currently use their full ISA allowance;
- an increase to the child element of the Child Tax Credit of £20 a year above indexation from April 2010, providing valuable support to families with children;
- an additional £125 million in 2009-10 and £145 million in 2010-11 allocated to the Social Fund. The Social Fund was established to provide interest free loans to vulnerable people allowing them to meet and spread the payments of unexpected costs over a longer timeframe; and
- an increase in the level of statutory redundancy pay, making the weekly rate £380.
Therefore, Budget 2009 also announces a package of measures to help homeowners, homebuyers and the housing market:
- a £600 million funding package of measures to build more homes through unlocking sites currently sitting dormant; and
- an extension of the stamp duty holiday for all houses costing up to £175,000 until 31 December 2009.
In addition, Budget 2009 announces:
- that from April 2010, an additional rate of income tax of 50 per cent will apply to income over £150,000, and the income tax personal allowance will be restricted for those with incomes over £100,000;
- that from April 2010, tax relief on pensions contributions will be restricted for those with incomes of £150,000 and over, and tapered down until it is 20 per cent; and
- changes to alcohol and tobacco duties, and a package of measures which will protect £3 billion of tax receipts a year by 2010-11 from tax evasion and avoidance.