Petrol duty rise cancelled but more head for 40% tax rate
Next month's planned 3p a litre rise in fuel duty has been cancelled as economic forecasts are lowered.
George Osborne cancelled the rise in fuel duty during his Autumn Statement in the face of lower economic forecasts. The Office for Budget Responsibility sales the economy will contract by 01% this year, compared with a 0.8% rise it predicted in March. It also reduced 2013's forecast growth from 2% to 1.2%. It now predicts growth of 2% in 2014, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017.
While the chancellor increased the income tax threshold by £235 to £9,440 from next year, the threshold for the 40% rate will rise by just 1% in 2014 and 2015 bringing 400,000 more consumers into the rate by 2015/2016.
Corporation tax will be cut by a further 1% to 21% from April 2014. The basic state pension will rise by 2.5% to £110.15 a week next year while most working-age benefits and child benefit will increase by 1%.
Lawyers Wedlake Bell warned the reduction of pension tax relief will drive first time home buyers from the market. 'A further restriction on pension tax relief is likely to have an impact on first time buyers who are already struggling to get on the property ladder because of reduced lending and high property prices. Aspiring second home owners, international investors and property developers have already crowded the market without the arrival of future pensioners driven into buy-to-let investments by unappealing conventional pension arrangements, looking for a safe haven for their "old age" funds,' says Camilla Wallace, Wedlake Bell partner.