What does the Budget mean for you?

So, after weeks of pre-amble, the last Budget before the general election is here. It's already received a number of name tags, from the Robin Hood Budget to the ‘holding' Budget - but what really matters is how it all affects you. Here's our breakdown, and what some of the experts think of the Budget 2010.

What the Budget means for...

Homeowners and homebuyers

Probably the biggest winners from the Budget 2010 were first time buyers (FTBs) with Alistair Darling choosing to scrap Stamp Duty for the purchase of all first homes under £250,000 as of midnight tonight (if you've read our property blog, you'll be interested to know that our editor let out a humungous ‘YES!!!' when this was announced.) According to the chancellor, this will mean that 9 out of ten FTBs will now not pay a penny on the duty - although the cost will be covered by an increase to 5 per cent for homes bought at more than £1 million.

Also announced was further help for those struggling to keep up their mortgage payments, with the Support for Mortgage Interest scheme being maintained at the higher rate of just over 6 per cent for another six months.

What the experts say...

According to Halifax housing economist, Martin Ellis, an additional 40 per cent of first-time buyers will benefit from the lowest stamp duty threshold being £250,000 rather than £125,000.

Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), also supported the move. He said: "For thousands of first time buyers the dream of getting onto the property ladder was slipping out of reach. This announcement has added a new rung to the property ladder, one within reach of thousands of young families."

Savers

A few encouraging steps for savers this year. The Treasury set a welcome precedent by announcing an incremental rise in ISA allowances to match inflation. This will mean the overall limit will reach £11,200 in five years' time, as long as inflation follows the Bank of England's 2 per cent target throughout the period. The Saving Gateway scheme, due for introduction later this year, will also see the government add 50p to every pound saved by those on the very lowest incomes.

However, there is still a vast amount more that could be done. Alistair Darling's proud claim that the savings ratio had reached its highest level since 1998 was met with howls of derision from the opposition benches, and rightly so. With the base rate currently standing at 0.5 per cent, Brits have little or no reason to see the value in putting money away.

What the experts say...

The increase in ISA limits was welcomed by most, though newly formed action group Save Our Savers said the government had missed out on a crucial opportunity to make saving worthwhile.

Revd John Strain, spokesperson for Save Our Savers, said that the government "has shamefully shied away from what needs doing yet again.

"What we need above all are clear objectives for saving, such as a long-term target for the savings ratio, requiring a range of incentives to maintain it," he added.

Families/Low Income Households

There was a quite a stir when the Chancellor's plans to ensure basic bank accounts for all were touted in the newspapers in the run up to his speech. Obviously, the news will be a huge boost for those who are currently unable to take advantage of all the benefits of direct debits and so on. However, it may not be such a fillip for everyone else - some experts suggest that the majority will pay the price in the end, as banks pass the additional cost on to consumers. Darling also announced that the minimum wage will increase by a relatively modest 2.2 per cent this October to reach £5.93.

Gareth Kloet, head of Utilities at Confused.com, shared his views on winter fuel payments: "It is great news that vulnerable pensioners will continue to get support with their winter fuel payments, £250 for all pensioners and £400 for the over 80s will definitely help towards those dreaded bills."

John Lawson, head of pension's policy at Standard Life, added that the Budget offered "small but welcome gestures in the wider context of pension tax reform. The ability to combine pots for couples is particularly welcome and may help ensure that the death of the first spouse or partner doesn't leave the survivor in poverty".

Motorists

This year's Budget was really a case of ‘could have been worse' for Britain's drivers. Acknowledging the impact of major increases in petrol prices and other motoring costs this year, Darling announced that the 3p increase in fuel duty would be staggered in order to ease the pain. This means a penny rise in April, followed by an increase by the same amount in October and January.

Also introduced was a fund for improving Britain's roads; a vital addition after the coldest winter in 30 years tore into lanes and motorways across the country. There will now be a combined £385 million devoted to repairs and improvements.

What the experts say...

Will Thomas, head of Motor Insurance at Confused.com, said: "This rise in fuel cost has come as no surprise to motorists but is still a blow." While, professor Edmund King, president of the AA, added: "Drivers' relief at the chancellor not raising fuel duty by 3p on April Fool's Day will be short-lived if prices continue to rise. The immediate rise of 1p per litre will cost 50p a tank more to fill up."

Taxation

Always a popular form of fundraising in times of economic difficulty, ‘sin taxes' were high on the agenda again in what could be Labour's final Budget. Cider lovers were surprisingly hard hit, with a ten per cent above-inflation increase in duty on the drink, while tobacco also rose by 1 per cent. The controversial 50p tax on landlines will also be pushed through on 1 October as the government seeks to fund the switch to super-fast broadband for all. Perhaps most contentious was confirmation that National Insurance increases of 1 per cent for employers and employees will go ahead next April.

The pleasing news for the average household was that there were no increases to VAT, income tax or Capital Gains Tax, despite feverish speculation prior to the chancellor's speech. Not exactly a cause for celebration, but at least a welcome respite before the really tough decisions are made in the first post-election Budget.

What the experts say...

John Walker, national chairman of the Federation of Small Businesses (FSB), described the upcoming rise in National Insurance contributions as "a tax on jobs which will do nothing to aid economic growth".

The British Beer & Pub Association, meanwhile, joined thousands of Facebook users in registering their horror at the cider duty increase, with chief executive Brigid Simmonds calling it "a snub to voters, who by a majority of two to one wanted the Chancellor to scrap the beer tax escalator".

About the Author

If reading the above has made you concerned what effect this years budget may have on your savings and mortgages then it might be a good time to research the specifics of each provider.