- Income tax rise
- Budget: the reactions

The news has been full of Budget stories – notably the rise in income tax for higher earners and the huge debt levels the government is building up. But what does the Budget really mean to you.

AOL Money spoke to a number of people to gauge their reaction to the Budget and whether, after all the dust has settled, they are actually any better off.

Joanne Coley, 39, from Chobham in Surrey is married with two kids.

‘There were two things in the Budget that appealed to me: firstly the increase in the ISA allowance. Myself and my husband Richard try to make use of our annual ISA allowance and the increase this time is actually quite significant. (₤10,200 from the previous limit of ₤7,200). What is infuriating is the fact that those under 50 will have to wait a year until they can make use of the higher allowance. I don’t understand why it has been staggered in this way. But all in all, it is a good thing.”

Coley adds: “The second thing that caught my attention was the car scrappage scheme.” (From next month until March 2010 motorists will receive £2,000 discount on new cars if they trade in cars older than 10 years). “My husband has a BMW car that is 10 years old and it has been valued at less than ₤2,000 so in theory it is a good deal for us. It means we won’t have the hassles of trying to sell privately and it will be interesting to see what deals we can get down at the car showroom.”

The Budget didn’t have a great deal new for the family in terms of benefits or allowances (Child tax credit to rise by £20 by 2010. Child trust funds for disabled children to rise by £100 a year, £200 a year for severely disabled children.) “To be honest, given the level of debts the government is dealing with, I didn’t really expect much to be given away this Budget in terms of allowances for families.”

Roy Conway, 74, retired financial services trainer from Mayford in Surrey.

“I welcome the increase in the ISA allowance as anything to encourage savings and reduce dependency on the State has to be welcomed. Myself and my wife both have ISAs so it is a positive thing for us. Though I do wonder whether it will all end up going to a nursing home in the future!”

Conway believes the increased tax for higher earners is backward step and solves very little. “I don’t agree with it as I don’t think it does the economy any good in the long run – besides top earners usually have accountants to get their tax bill down! What mustn’t be overlooked is the increase in NI contributions – and no doubt there will be other stealth taxes to follow to pay for this governments enormous spending.”

The decision to maintain stamp duty exemption on properties below ₤175,000 has also been given pretty short shrift by Conway. “It might make a difference in the north of England but how many properties can you buy for less than ₤175,000 in the South. I can’t see how this will get the housing market moving again.”

As for what was in the Budget for pensioners, Conway’s response is pragmatic. “Any raise in the State pension is always welcomed and the allowances on fuel etc do make a difference but I take issue with the government’s claim that things are getting cheaper. My wife doesn’t see things getting cheaper down at the supermarket. Prices may have come down from the ridiculous temporary highs over a year ago when commodity prices went through the roof but in general we are not better off. The Retail Price Index may be falling but the Consumer Price Index (which does not take into account falling mortgage payments) is actually going up so essentials are actually costing more. Added to that you have an extra 5p on beer and 2p on fuel – not sure we will notice much more in our pockets in 2009/10.”

Joan Ravey, 70 retired secretary from Southport, Merseyside.

“I wouldn’t say it was a great Budget by any means but there are some good points. A friend of mine is looking to buy a house which is below the ₤175,000 threshold for stamp duty so that does make a difference. The ISA allowance is fine if you have ₤10,200 a year to save but we don’t so it makes no difference to us.”

“I don’t feel strongly either way about the increase in tax on higher earners – I think it was a pre-Election stunt. But I do welcome the fact that tax relief on pensions will be reduced for people on more than £150,000 a year from April 2011. I think it is wrong that the biggest beneficiaries of tax relief have been the very wealthy.” (In his speech the Chancellor stated that one quarter of all money on pension tax relief currently goes to 1.5% of top earners.)

David Osman, 38, freelance PR/marketing consultant from Birmingham.

“I don’t think there was enough in this Budget for businesses. It is all very well talking about money for retraining but retraining for what exactly and what are all these growth sectors that will suddenly be able to employ everybody? I thought it was all very sketchy. Sure some of the measures on tax will make a difference (Help for loss-making companies extended - they will be able to reclaim more taxes paid in the last three years until November 2010. Businesses' main capital allowance rate doubled to 40% to encourage firms to bring forward investment), but it is still going to be hard for small businesses to borrow money in this climate and cash flow problems will continue to get worse. For small businesses like mine the credit crunch has meant invoices are now taking months to be paid – at the same time my overheads and commitments don’t change. I wish this could be addressed in some way.”