THE taxation system is the most direct way the Government impacts on each of us, it goes straight through to our pockets. It is reasonable as a result to expect the Budget, which details the way in which we will be taxed over the next year, to hit the headlines.
When flicking through the papers from last week, it is no wonder I have been contacted by so many people questioning the detail. The so called ‘Granny Tax’ seemed to be of most concern and I would therefore like to put some of the concerns at rest. In my opinion this was a reforming Budget that will provide real help to families and businesses.
The increase in the income tax personal allowance is great news for hardworking families and means that over 3.3million people in the south east alone are better off by up to £220 per year, and 244,000 low earners will have be taken out of tax altogether.
It is right that the rich have to pay their fair share, so I am pleased that at the same time as scrapping the economically damaging 50p tax rate, we are cracking down on tax avoidance.
The Budget also detailed plans to simplify small business taxes and cut corporation tax. This is particularly good news for MK which seems to have had a flurry of small business start-ups.
Many of you have been in touch with me about the change in child benefit, I have written to the Chancellor on several occasions to try and portray the general sense of feeling in MK. The decision to only withdraw child benefit where someone in the household has an income of more than £50,000 was particularly welcome and I was really pleased to see that to prevent a cliff-edge, this withdrawal will be gradual. Only those households where someone earns more than £60,000 will lose all their child benefit. An extra 750,000 families will keep some or all of it. Ninety per cent of families will be eligible and only the richest 10 per cent will get none.
I am committed to supporting pensioners and understand why this is such an emotive issue. Despite what the media might have portrayed, under this Government pensioners are better off. The Government has introduced a ‘triple lock’ guarantee for the basic state pension which means pensioners will see the biggest ever rise in their state pension this year, worth £5.30 per week. In 2013-14 pensioners will receive £130 more than they would have done without the triple lock, and for the next three years existing pensioners will be better off as a result of changes announced since June 2010.
Ministers are protecting key pensioner benefits such as Winter Fuel Payments, free prescriptions and eye tests, free bus travel and free TV licences for older pensioners.
On the age-related allowance specifically, the change announced in the Budget simplifies a very complex area of the tax system and moves us towards a straightforward system in which everyone has the same personal allowance. No one faces a cash loss and it will just mean those in employment will have their allowances bought back in line with pensioners. It is also worth noting that this change affects less than half of pensioners and in fact over five million of the poorest pensioners are unaffected. But the most important point is that thanks to the triple lock up rating system, all pensioners are still better off under this Government, including when you factor in the age-related allowance change.
I understand why people are so concerned, but I hope I have been able to add a little clarity among all of the furore. If you have anything you want to talk to me about feel free to call me on 01908 686830.