I guestimated in my rant about the new 50% tax rate introduced in the UK Budget yesterday that I wouldn’t be much better or worse off because of the various changes.
A quick skim this morning through the various online calculators that have popped up proves the point: I will be just a couple of good bottles of wine poorer, and that’s mainly because of the increase in duty on good bottles of wine!
Most of my gross annual income comes through dividends, since I run my own Limited Company. This means I’m not much affected by tweaks to the income tax system – the stalling of the increase from 21% to 22% in the small business tax rate is more relevant to me.
The new £10,200 ISA contribution limit will make a difference over time, but it won’t mean any immediate change in my living standards.
Wondering how the 2009 Budget has affected you? Interestingly, I’ve noticed there are two camps of Budget calculators on the big websites today.
I had a lot of fun today covering the UK Budget over on the Monevator Twitter channel. It was fun racing other finance bloggers and the bloke who does the BBC captions to announce the news.
There were two occasions though when I was late with my updates. Both times it was because I was too annoyed to ‘tweet’ before I’d calmed down. It happened:
- 1. When the Chancellor outlined the £2,000 scrappage scheme for cars
- 2. When he revealed the 50% tax rate for those on over £150,000 a year
Both moves were idiotic distractions when the country needs real leadership.
Amid the horror story that was the UK budget today, one bright spot stood out for those of us trying to save and invest our way to wealth.
The government is raising the annual limit on ISA contributions from £7,200 to £10,200.
Half of this ISA limit can be ‘wrapped’ around cash savings, just like today, with the rest (or more, up to the £10,200 limit) put into a stocks and shares ISA.
This means you can now save £5,100 in cash per year, tax free, or better yet use the ISA allowance to build up a long-term share portfolio.
I plan to use the full £10,200 limit every year to gradually shield more and more of my investments from tax.
I looked last week at the steep rises in US and UK bank share prices as the fear factor has fallen back.
U.S. banks are up 50% over the month, for instance.
But in the case of certain UK banks, the reversal has been even more extreme.
Consider Barclays shares here in the UK.
When I first wrote about the emotions driving bank share prices back in January, Barclays shares were priced at 90p. Yet I trusted HSBC and Standard Chartered more as banks to see out the turmoil, as they seemed far less likely to have got into serious difficulties.
In terms of the subsequent share performance, it hasn’t been my greatest short-term call. Barclays shares fell back to 60p for a while, but they’ve since risen to over £2 a share.
Every week I read a large number of personal finance and investing articles. Here’s my latest weekly shortcut to the best.
