Forget anything about what a post-election Chancellor would do to bridge the deficit gap. Instead, look back and see what taxes have been already been put in place to start hitting your wallet after the new tax year starts on April 6th.There is expected to be a 3p per litre increase in fuel duty. The exact figure will depend on the projected inflation figure that will be announced in the March 24th budget. If the 3p amount is correct then the amount of duty taken for every litre of fuel will be 59.19p. But remember, this is one of the taxes that is further taxed by the application of VAT.
A little known tax that will come into effect is the one off increase in Vehicle Excise Duty (VED) or ‘Showroom Tax’. All cars registered after April 1st will face an increase in VED, some as high as Â£1,000. The aim is to penalise purchasers of high emission vehicles. If you’re in the market for one of these buy now. And if you wait to source one later from the second hand market prices there may go up as demand increases.
After its claims to be saver friendly there is of course the freezing of the upper levels of the State Second Pension (S2P). This was initially designed to pay higher earners a bit more pension in recognition for their higher contributions over the years. On top of this, NI contributions are going to rise from 11% to 12% so we all pay even more. In the end the S2P will be a flat rate (from 2030) so everyone will get the same no matter what their contributions. It may be time to use the full ISA and pension contribution allowances.
The Inheritance Tax nil rate band will be frozen at Â£325,000 (Â£650,000 for a couple).Â Estates are taxed at 40% above this level. Gifting your money without falling foul of the tax rules has also become more difficult over time as the basic rules have not changed since 1980. Now factor in the recently proposed ‘death Tax’ to pay for long term care.
But peoples’ memories are exceeding short! It is not the previous government that will take the blame for our personal poverty, but the poor saps who take office.