A Budget of small percentages

20th March 2013

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If only this was likely to be a Budget for savers and investors. Instead it is likely to be Budget of small percentages, changes in thresholds, shifting of policies by a year or two, but nothing too fundamental.

There will be exceptions for individuals and we know some of the details from pre-Budget policy announcements. If you are a womAn worried about missing out on the state pension reform, then the change to 2016 from 2017 may well see you get a little more money.

On the downside, your private sector final salary pension scheme could close earlier. If you have ambitions to buy your council house, it is likely that it will get easier to buy a more expensive house as the threshold is likely to move to £100,000, good news in some parts of London.

The system of child care spending is to change with the pros and cons considered in Mindful Money today by financial and consumer journalist Jill Insley. It also looks like the lower threshold for income tax will rise, a Lib Dem policy that actually the Conservatives don’t seem to mind either.

One small significant detail of interest to investors, and certainly those who invest on behalf of their children, is that child trust funds are likely to be allowed to transfer into the junior Isa regime, a small but significant change for many families, as the Daily Mail reports this morning.

But can this Budget be bold or radical or help savers? Unfortunately Mindful Money doubts that. The amount you can put in a pension over a lifetime is unlikely to change which is a significant disincentive to ambitious investors. The Isa limit is likely to increase further, one very good policy adopted by the this Chancellor was to keep increasing it to take account of inflation year on year. No such upgrade is likely for inheritance tax with any extra money likely to pay for long term care changes now due in 2016.

On the downside. it is unlikely anything will be done to address the fact savers have been penalised by the long term policy of quantitative easing by the Bank Of England. Well, it wouldn’t be wise to get your hopes up too much.

The economic climate is one of rising and stubbornly medium inflation in the UK much of it imported due to the falling pound, lower growth, depressed household incomes and salaries, difficulties for savers, and one bright spark relatively low .

Departments are to see another small cut back, to feed into infrastructure and other investment projects – but there may simply not be enough wiggle room for a dramatic change in direction.

The Right want tax cuts, the Left for the most part wants a slower pace of cuts and almost everyone to go for growth. But as we say this is likely to be the Budget of small percentages. We can, just predict one thing with some certainty. There won’t be a tax on pasties. That’s something at least.

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