The Government has been clear that the burden of deficit reduction must be shared. The Budget includes a package to mitigate the impact on the most vulnerable in society.
To reward those who work hard and save responsibly for the future, the Budget announces:
- The personal allowance for under 65s wil be increased by £1000 in April 2011, benefitting 23 million taxpayers and removing hundreds of thousands of people from income tax altogether.
- Uprating the basic State Pension by a triple guarantee of earnings, prices or 2.5 per cent, whichever is highest from April 2011.
To share the burden of deficit reduction across all parts of society, while supporting the most vulnerable, the Budget announces:
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- Action will be taken on unacceptable bank bonuses, and a levy based on banks’ balance sheets will be introduced from January 2011 to reflect the risks they generate.
- An increase in Capital Gains Tax from 18 to 28 per cent for higher rate taxpayers, while the entrepreneurs’ relief life time limit will rise from £2 million to £5 million.
- A radical programme of welfare reform to focus Housing Benefit, Disability Living Allowance and tax credits on those most in need and make the system more affordable; and switching to a system of up-rating benefits, tax credits and public service pensions in line with the Consumer Price Index instead of the Retail Prices Index from April 2011.
- Ensuring support is targeted on those who need it most, by freezing Child Benefit for three years to help fund increases in the child element of Child Tax Credit of £150 above indexation in April 2011 and £60 above indexation in April 2012.
- A two-year public sector pay freeze, while protecting the 1.7 million public servants that earn less than £21,000; and carrying out an investigation on public service pension provision to inform the Spending Review, and report in full in time for next year’s Budget.
- Working with local authorities to freeze council tax in 2011-12.