Budgeting for Age of Austerity
W HATEVER Chancellor George Osborne pulls out of his hat in next week's Budget, workers in Nick Clegg's "alarm clock Britain" will be unimpressed when the "age of austerity" dawns barely a fortnight later.
No fewer than 15 tax rises and benefit cuts take effect on April 6: the threshold for higher rate (40%) income tax falls by pounds 1,400 to pounds 42,475, while National Insurance rates (paid by employees) rise 1% to 12% on wages up to pounds 817 per week.
David Kilshaw, chair of private client advisory at accountants KPMG, says: "This year's Budget is unusual as we have been told about the measures for the next Finance Bill already - in other words, the changes come in on April 6. But the Chancellor can still add 'emergency' measures on March 23, so we don't rule out any surprises on tax."
Months of talk about public sector spending cuts are about to become a grim reality at a time when household finances are stretched by soaring petrol bills.
Kevin Mountford, head of banking at Flintshire-based finance website Moneysupermarket.com, says: "Instead of letting rising costs diminish their spending and saving power, consumers must take control of their own finances and be their own 'chancellor' by reviewing their own household budget."
Here's some potential savings from Moneysupermarket.com.
. ? Mortgage: of typical potential household annual savings of pounds 2,443 per year, nearly half - pounds 1,029 - could be saved by switching a pounds 150,000 mortgage from a standard variable rate (SVR) at 4.74% to a two-year fix - say, Santander's deal at 2.79%. ? Current accounts: the scope for savings may be limited, as average interest paid on balances has shrunk to 0.19%, with many paying nothing.
Santander's Preferred In-Credit Account pays 5% on balances up to pounds 2,500 for the first year, reducing to 1% after 12 months. Another attraction is a fee-free arranged overdraft after 12 months, but at least pounds 1,000 must be paid in each month.
The West Bromwich BS WebSaver account pays 3.01%, earning pounds 301 interest a year on a pounds 10,000 deposit. ? Personal loans: with M&S Money rates from 6.9% APR, savings of pounds 105 a year are possible on a five-year pounds 7,500 loan. …