The budget and your Will

The Chancellor George Osborne has delivered the Conservative/Lib Dem government’s first Budget. How will this affect your estate and your will writing planning for the future?

Firstly, let’s look at some major changes from today’s budget:

The main impact upon the UK public will be that from January 4th 2011, VAT will go up to 20%. Current zero rated items will remain at 0%. This will have an enormous impact as people spend (particularly on large ticket items) before the deadline, so Christmas will be a bumper season.

For companies, corporation tax will go lower to 27% and keep going down 1% per annum until it reaches 24%, so companies will make more profits while individuals pay more tax.

The dreaded Capital Gains Tax stays at 18% for low and middle-income savers but from tomorrow, higher rate taxpayers will pay 28%.

The government’s aim is to bring current borrowing at around 10% of GDP down to just over 1% this next year and they intend to wipe out the majority of UK (government) debt problems within five years.

They say inflation will be around 2%, which is still less than most savings accounts pay. Another claim is that unemployment will fall by around 40%.

If you work for the government you can expect a two year pay freeze unless your salary is under £21,000 per annum; then you’ll get a £250 rise both years.

The government will hurry the increase in state pension age to 66.

Child benefit will be frozen for the next three years and Tax credits will be reduced for families earning over £40,000 next year.

Without knowing the full rules yet, the government will introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.

Looking for good news, from April 2011, the threshold at which employers start to pay National Insurance will rise by £21 per week, above indexation. Surprisingly, cigarettes, alcohol and fuel will not change in terms of tax.

A bank levy is being introduced to tax the banks. Unfortunately we all know this means that banks will charge this on to their customers so the public will pay the bill.

The Budget is “tough but fair”, he said.

The UK will not join the euro in this Parliament, and the euro preparation unit in the Treasury will be disbanded.

To sum up, the government are planning to be tough over the next five years, by giving some money back in terms of NI and taxation, but then taking away (probably more) in VAT. If it’s for the long term good, then the UK public will accept it because it was quite obvious to all but the previous chancellor and prime minister, that the labour government were taking the UK down the financial disaster route. This perhaps makes these new changes more palatable.

So how does this affect your will? Make sure you update your personal financial situation on a regular basis and talk to your will writing professional to see if your will needs updating. Everyone’s situation is different, but it appears that we will all be better off over the next few years except for the VAT hike, which once up, will probably never come down again. If they do start to balance the debts, inflation and unemployment, then the stock market will probably be a good investment again, maybe, if, could be etc.

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