UK Pre-Budget Report – 2008
The UK Pre-Budget report was announced yesterday by Chancellor Alistair Darling. The report which is published each autumn was first introduced in 1997 by then Chancellor Gordon Brown. It aims to set out the direction of Government policy in the run up to the spring Budget. In light of the banking crisis the measures announced have been eagerly anticipated.
The following key elements from the pre-Budget report may affect frontier workers or those thinking of moving or retiring across the border. A detailed report is available from the Treasury website http://www.hm-treasury.gov.uk/prebud_index.htm
• The report announced that all rates of National Insurance contributions are to be increased by 0.5% for all employees and employers from April 2011
• The rate of VAT is to be cut from 17.5% to 15% from 1 December 2008 until 31 December 2009.
• A new 45% higher income tax rate is proposed for earnings above £150,000 from April 2011 - hitting about 1% of tax payers.
• The £120 rebate for basic rate taxpayers, introduced in the wake of the 10p tax row, is made permanent and increased to £145 from April. (link to news item)
• The pension credit will be increased in April from £124 to £130 a week for individuals and from £189 to £198 for couples. State pensions will rise in line with the highest rate of inflation, from £90.70 to £95.25 for a single person. Pension and child benefit increases will take effect in January, three months early, and every pensioner gets a one-off payment of £60 from January while couples get £120.
These new measures are likely to have a huge impact for anyone crossing the border.
Northern Ireland has seen the biggest influx of cross border traffic since the 1970s especially after a report in June from the National Consumer Agency Ireland which revealed that a basket of goods is 30% cheaper in Northern Ireland.
The number of shoppers on the hunt for bargains is set to increase further following the announcement in yesterday’s Pre-Budget report that VAT is to be cut from 17.5% to 15%. The cut which is due to take affect from 1st December 2008 and last until 31st December 2009 will mean a 6% lower rate that the Republic. It was announced in the Irish Budget last month that VAT will be increased from 21 to 21.5% with effect from 1 December 2008. The reduction in UK VAT is likely to have a huge impact on the number of cross border shoppers travelling north. This potential loss in revenue is obviously of great concern to the Irish Government.
The Minister of Finance Brian Lenihan has said an increase in the number of people travelling North of the border to do their shopping had made things “very, very difficult” when he was framing the Irish Budget. He said there was huge loss of revenue to Northern Ireland, because of the number if goods and services being purchased their by shoppers from the Republic. The Minister said this substantial expenditure meant the Government had to impose higher taxes for essential public services.
© Northern Ireland Association of Citizens Advice Bureaux (NIACAB) 2008
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