What the Budget means for your wallet

The Chancellor has given his final Budget before the election - and it's not good news if you're rich and like cider...

Today Alistair Darling, the Chancellor of the Exchequer, gave his final Budget before the upcoming election, and only a political diehard would have found it a scintillating experience.*

But while it was deathly dull, of far more importance is how it will impact on your finances. So let’s have a look at the big winners and losers of the Budget 2010.

The winners

First-time buyers

Probably the biggest announcement, and certainly the most leaked, surrounded the changes to Stamp Duty (the tax you are whacked with when you buy a property). As expected, the threshold before you have to pay the tax was doubled to £250,000, though this only applies to first-time buyers.

This is obviously a terrific boost for those looking to join the housing ladder for the first time, as previously buyers would have to pay 1% of the transaction in tax.

However, it's impact will be somewhat limited. According to figures from Halifax, only three regions in the UK boast an average transaction price of more than £125,000 for first-time buyers - the South West, the South East and London. In the rest of the country, the average price is far smaller (in Scotland for example, the average first-time buyer property price is just £92,815).

Drivers

It might sound odd when their tax is going up, but drivers are slight winners from this Budget too. The Government is sticking with its plans to raise duty by 3p, but have opted to stagger the increases. As a result, duty will go up by 1p in April, another 1p in October and finally a third 1p next year.

With petrol prices moving towards record highs, that is a relief, though savvy readers will know there are ways to cut your petrol costs by a third.

Savers

Those looking to build up their savings have also been given a decent shot in the arm. Not only will banks be obliged to make current accounts available to all – currently more than a million people are excluded – but ISA limits will also increase by inflation each and every year. (The ISA limit is already set to increase from £7,600 to £10,200 on April 6th.)

This is a terrific boost to those looking to build up a decent safety net, without their returns disappearing into the hands of the taxman. Currently, it is possible to get a 4.60% return on your savings, absolutely tax-free!

Small businesses

However, in my view, potentially the biggest winners are small businesses.

For starters, the Government will force the banks that have relied on bailouts, Lloyds and Royal Bank of Scotland, to ramp up how much they lend to small and medium sized businesses to £94bn.

This is badly needed, as credit for businesses has completely dried up in recent months.

Business rates will also be cut for a year from October.

• Watch this video: 3 tips when opening your first ISA

The losers

High-end property buyers

That Stamp Duty holiday for first-time buyers has to be paid for somehow, and it’s homeowners at the top end of the property market who will have to meet that burden. All buyers of properties of more than £1m will be walloped with a 5% tax charge.

Yet more bad news if you are a city banker of course and for those on high incomes (who already set to be hit by the new 50% income tax band), and particularly if you are planning to buy in London or the South East, as according to property information site Zoopla, 81% of £1m homes are located there.

Drinkers and smokers

The group of people traditionally hit the most from Budgets are those who like a drink and a smoke, and this year was no different.

Cigarette duty will go up 1% this year, and 2% in future years.

You can’t drown your sorrows with alcohol either - the duty on beer, wine and spirits will go up by 2% a year until 2013, as already announced, though cider drinkers have taken a real hit. From Sunday night, duty will jump by a whopping 10%! Ouch

The wealthy

In addition, those hoping to leave a lot of money to their loved ones when they pass on will also be disappointed that the Inheritance Tax thresholds will be untouched for the next four years. It currently stands at £325,000 (or £650,000 for couples) before a 40% tax applies.

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And if you are a wealthy tax exile in Belize, Dominica or Grenada, then your money might not be quite as secure as it was, with the UK set to sign tax information agreements with all three of those nations. Perhaps it shows just how dull the Budget was that this announcement garnered the biggest reaction of the entire speech from those inside the Chamber.

Of course, all this may end up a tad irrelevant. Should the Conservatives win the upcoming election, their Shadow Chancellor, George Osborne has promised to give his own ‘emergency Budget’ within a matter of weeks of taking office. So we might be going through all of this again very soon.

Can’t wait...

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*If you watched it, and managed to get through it without yawning, then I salute you!

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