Monthly Archives: March 2012

2012 Budget

Chancellor George Osborne has delivered his 2012 Budget speech. We look at the big announcements affecting our money.  

Chancellor George Osborne’s 2012 Budget statement was arguably the most leaked in history. But while there may have been few surprises around announcements such as the abolition of the 50p tax rate and the increase in the tax-free income tax threshold, we now know when they will come into effect.


Let’s take a look at how the major announcements affect different groups of people and when the measures will be implemented:


All workers - The tax-free personal allowance on income tax was due to rise to £10,000 by 2015 – a key Liberal Democrat election pledge. The allowance will increase to £8,105 from this April. But, from next April, the amount will increase to £9,205, as the Chancellor delivers on Nick Clegg’s request to “go further and faster”.


But the basic rate limit will be reduced from £34,370 to £32,245 in April 2013, so people earning over £41,450 will get a quarter of the benefit of basic rate taxpayers. This cut is funding the increase of the Child Benefit threshold to £50,000.

And 20 million of us who pay income tax will receive an annual personal tax statement from 2014/15 showing how much tax and National Insurance we pay and where it goes. This initiative is reported to be costing £800,000 a year and will eventually be rolled out to all taxpayers


Motorists - Another cut or freeze in fuel duty was by no means a certainty and it didn’t materialise, so the 3p increase in fuel duty planned for August will go ahead. Vehicle excise duty will increase in line with the Retail Prices Index measure of inflation from April this year.


The Fair Fuel Stabiliser means above-inflation rises in fuel duty will return only if the price of oil falls below £45 a barrel.


Families - Child Benefit was another major debating point in the run-up to the Budget. The threshold for withdrawal has now been raised to an income of £50,000 and it will be reduced gradually. Households where one person earns over £60,000 a year will have their Child Benefit withdrawn.

Pensioners - There will be a single-tier State Pension, based on contributions, likely to be £140 a week but not until 2015 at the earliest. The Second State Pension will be abolished.


Existing age-related income tax allowances will be frozen from April 2013 at their 2012-13 levels for people born after 6th April 1938 until they align with the new income tax personal allowance thresholds for working taxpayers.

There will be an automatic review of the State Pension age published this summer.


Public sector workers - Independent pay review bodies have examined the case for local pay for civil servants and some local authorities will have the option of switching to it.

Additional (50%) rate taxpayers - It was trailed everywhere that George Osborne won the political battle to abolish the 50p top rate of tax. The Chancellor trumpeted the fact that this tax rate is higher than many of our competitor countries and how much income was shifted into previous tax years to avoid it. The only thing that wasn’t clear was the timetable for when this would come into effect.


We now know that it will be 45p from April next year. The Chancellor says the other taxes he has introduced on wealthier people will raise five times the amount of revenue the 50p rate does.


Members of the armed forces - There will be a £100 million fund for improving the accommodation for the armed forces. The rate of council tax relief and the families welfare grant will be doubled for the families of armed forces members.

Millionaires - Cracking down on tax avoidance was a big theme of Budget 2012 and an additional Stamp Duty threshold of 7% was announced on properties bought for more than £2 million from midnight tonight. There will be also a threshold of 15% on of properties worth more than £2 million bought via companies.

Unemployed people - Beyond a pledge to introduce loans to help young people start their own businesses, there were no new measures announced to tackle unemployment. The Budget Book does confirm the Government has adopted the Low Pay Commission’s recommendation for a below-inflation increase in the minimum wage to £6.19 an hour for those aged 21 and over in a bid to boost recruitment.

Savers - There will be a cap on income tax relief of 25% of a person’s income or £50,000, whichever is greater, for anyone trying to claim more than £50,000 of relief. There are no changes to ISA savings limits, which will continue to rise in line with inflation.

Small business owners - Corporation tax will be cut by a further 1% to 24% from next month. The two further 1% cuts planned for the next two tax years will still go ahead. That will leave us with a rate of 22%, while the Chancellor made clear his aspiration to cut corporation tax down to 20%.


There will be new Enterprise Zones in Scotland, Wales and Northern Ireland.

Video games, animation and TV production companies will get further corporation tax breaks. But VAT will be extended to the rental of hairdressers’ chairs, sports drinks, static holiday caravans, cold food “consumed on a supplier’s premises” and certain hot food not already covered by VAT.


First-time buyers - The Stamp Duty exemption for first-time buyers buying properties up to £250,000 in value was due to end on 24th March and it has not been extended. There was nothing else, apart from a reference to the recent launch of the NewBuy Scheme to help prospective buyers with obtaining a mortgage on a new-build home,

Shoppers - The Sunday trading law will be relaxed for eight weeks from 22nd July to coincide with the Olympics and Paralympics.

Drinkers - The Chancellor didn’t announce any new measures, but duty will increase by 2% above the Retail Prices Index of inflation from 26th March, as per measures first announced in 2010.

Smokers - A pack of 20 cigarettes will cost 37p more from 6pm tonight.

Commuters - There will be improvements on the rail network in the north of England.


The Government will continue to work with the Mayor of London to look at longer commuter trains, extending the Underground and expanding river routes.


As ever with Budgets, the devil is in the detail and there will doubtless be more measures that were not announced in George Osborne’s speech but feature in the Budget book itself

Haggling & Bargaining

Haggling is on the up, with over half of us more likely to negotiate on price than five years ago, according to research by Santander.

There are all sorts of things I could write about. For example, containing your emotions is useful.

But this is not the defining factors in haggling. The main techniques that, in my experience, lead to confident negotiations with the right outcome:

Understand what a fair price is - You can’t just announce a ludicrously high or low figure and expect to meet at a fair price. You need to know what a fair price is for both you and the person you’re dealing with. You need to be clear in your head what an unfair price is, too. By truly understanding what is fair and unfair – which takes great personal honesty – you can negotiate confidently and with moral authority. This helps defeat your shyness.

It also leads to the best outcome for you: if your opponent is willing to deal at a fair price – or even better a great price – you make a deal. If not, your best outcome is to walk away. You should feel good that you made the right decision in either event.


Selecting buy-to-let property wisely - Picking out a buy-to-let property that you can let quickly and get the best return on is essential, whether you are a portfolio landlord looking to expand your portfolio or someone moving into buy-to-let for the first time.

And to get this right, you need to do your research. So here are a few tips:

Type of property - Assess what type and size of property is currently in demand. When doing this, you’ll need to consider what type of tenant you are looking to attract. Obviously student accommodation will vary considerably from a family home. And both will be different from the sort of place that might appeal to a young professional.

Location - The location will also affect what type of property you purchase. Figure out who mainly lives in the area you’re aiming to buy in and tailor your property to those demands. Speaking to your local agent will give you a better idea of what properties are suitable for certain markets.


Local amenities are also important. Family tenants will probably require nearby schools, while young professionals may need good public transport links. Likewise, students will probably not mind living above a shop on a busy high street, but older couples might.


Brokers - In addition to speaking to an agent, chatting to a mortgage broker about financing options is an essential part of moving into buy-to-let. A broker will be able to give you a good overview of the current buy-to-let mortgage market, assess what products are suitable and available for you and help you get insurance policies for your investment in place.