Budget June 2010: key points
A round-up of the key points from Chancellor George Osborne's first Budget
- Health In Pregnancy grant will be abolished from January 2011 and the Sure Start maternity grant will go to first child only from April 2011
- Child benefit frozen for the next three years, but no means-testing to be introduced at present
- Lone parents whose youngest child is over five will be moved on to Jobseekers Allowance rather than Income Support from 2011-12
- Tax credits eligibility reduced for some families earning over £25k from 2012/13* and for some families earning over £50k in 2011/12. The baby element of the Child Tax Credit will be removed - both from April 2011.
- Backdating of tax credits to be reduced from three months to one month from 2012-13 for new claims and changes in circumstance
- Child element of the Child Tax Credit to be increased by £150 above indexation in April 2011 and £60 above indexation in April 2012
- Reduction of the income disregard to £10,000 from £25,000 – bringing in the point at which working tax credits can be clawed back when family income increases – reversing Labour's decision to increase the disregard in 2006
- Withdrawal rates increased to 41% from 2011/12 – so for every pound earned over the threshold, 41p of tax credit will be withdrawn
- From April 2011, the weekly amount that parents joining an Employer-Supported Childcare scheme will be able to claim exempt of income tax and disregarded of NICs will remain at £55 for basic rate taxpayers, but will be reduced to £28 and £22 per week for higher and additional rate taxpayers respectively
- Personal income tax allowance increased by £1,000 to £7,475 in April 2011, which will take 880,000 people out of the tax system
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- VAT will rise from 17.5% to 20% from 4 January 2011; VAT on insurance will rise from 5% to 6%; current zero-rated items such as food, children's clothes and magazines will remain exempt
- Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years, until it reaches 24%; small companies' tax rate will be cut to 20%
- Councils who aim to freeze or reduce their council taxes for 2011/12 will be compensated by the government
- Capital Gains Tax remains at 18% for low and middle-income savers, but from midnight on 22 June 2010 higher rate taxpayers will pay 28%
- Housing Benefit to be reformed with caps on maximum rates for property sizes
- Allowance introduced for families who need an extra room for a carer
- Disability Living Allowance (DLA) to be reformed by introducing medical assessments for all DLA claimants from 2013-14
- Two-year pay freeze for public sector workers but the 1.7 million lowest paid (under £21k) will get a flat £250 pay rise over those two years
- No change to alcohol and cigarette duty
- Planned increase in cider duty to 10% above inflation scrapped from the end of June
- Possibly switching from a per-passenger to a per-plane duty being explored
- Basic state pension linked to earnings from April or increased by 2.5%, whichever is higher
* From 2012/13, families earning over £25k with just one child over the age of one (with no entitlement to baby, childcare or disability elements) will see their tax credits drop to £460/year, families earning over £30k under the same circumstances will receive no tax credits from 2012/13.
How does it affect you? Were you expecting the cuts to be worse? Share your reaction to the June Budget with other Mumsnetters on our Politics Talk board.