Homeowners given reassurance

THE pre-Budget report included a range of measures to stimulate the housing market and reassure nervous homeowners.

The Chancellor also introduced unspecified increases in fuel, alcohol and tobacco duty, to pay for some of his headline 2.5% temporary cut in VAT to 15%.

He said UK house prices are down 11% since March.

“Fewer people buying houses at lower prices mean less money from stamp duty,” he added.

To tackle this, he said he wants to improve the supply of mortgages to help stimulate the housing market but was vague on detail, saying the government “will work up a detailed scheme” by the Budget next spring.

He said that despite the 1.5% interest rate cut, homeowners still had fears of meeting the costs of their mortgages.

“For millions of people on tracker rates the recent interest rate cuts are worth around £100 a month,” he said.

He added that “repossession should be a last resort”.  As such, there will be three months’ grace for those struggling with mortgage payments.

In other measures, the temporary £120 allowance for people who lost out after the end of the 10% income tax rate will be made permanent, with the amount rising to £145 – a move the Chancellor said will benefit 22 million basic rate tax payers “for good”.

He added that no-one earning under £20,000 would be affected by the 0.5% increase in national insurance contributions that will come into effect in 2011.

At the other end of the scale, those earning over £150,000 will pay a new 45% rate of income tax.

And from April 2010 those who earn between  £100,000 to £140,000 will see a reduction in their personal allowance, to the same as those on the basic rate.

For the elderly, there is an increase in pension credit from £124 to £130.

In  transport, the Chancellor said petrol prices had fallen by 7% since last month, before adding that he planned to increase tax on fuel, alcohol and tobacco to compensate for the reduction in VAT.

Gas guzzling car owners will see tax increases of up to £30 but others with less polluting cars will see no increase, and in some cases a cut in their car tax.

And those fond of a long-haul holiday or two each year can expect to start paying more for it.

Mr Darling wants to “look again” at air passenger duty so that people who travel further pay the cost, rather than move to a ‘per plane tax’, which he said would harm the aviation industry.