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Budget delivers real help for personal finances

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Issued Date: 23 Apr 2009

Savers, pensioners, homeowners and people struggling with debt are to benefit from Budget measures to help people take control of their finances.

The Government is delivering a range of measures to provide real help to tackle the pressures people are facing as a result of the global economic downturn.

Welcoming the Budget boost to personal finances, Consumer Affairs Minister Gareth Thomas said:

"We understand that money is tight for a lot of people at this time. This Budget will help put money back in people's pockets, help them to take control of their finances and, for those in difficulty, get back on their feet again.

"We are helping people to get their foot on the property ladder and meet their mortgage payments, helping pensioners and people who rely on savings income, and putting real help in place for people struggling with debts and on low incomes."

Minister for Pensions and the Ageing Society Rt Hon Rosie Winterton MP said:

"It is important that we continue to support the poorest pensioners through the economic downturn. The changes we have made to Pension Credit will benefit half a million pensioners by ensuring that any savings up to 10,000 will not affect their benefit entitlement."

Ian Pearson MP, Economic Secretary to the Treasury said:

"The Government wants to help all savers get the best possible income from their savings by shopping around to secure the best interest rate.

"To help with this the Financial Services Authority's Money Made Clear service offers comparative tables of savings accounts and has recently introduced a telephone helpline where people can get free and impartial guidance on all aspects of personal finance."

Measures include:

* Tax-free ISAs - on the tenth anniversary of their introduction, the annual tax-free savings limit will be increased from 7,200 to 10,200 for over-50s this year, including half in cash, and available to other savers from next year.

* In response to the potential impact of falling interest rates on pensioners with savings the capital threshold in Pension Credit will be increased from 6,000 to 10,000. The 10,000 limit will also be implemented for pensioners entitled to Housing and Council Tax Benefit.

* Social Fund - an additional 260million in total over two years to meet demand for interest free loans for people in times of financial difficulty, available through Jobcentre Plus.

* Growth Fund - a further 18.75m to help people on low incomes obtain affordable credit and banking services through credit unions and other community-based institutions. This will help to prevent people sinking into a spiral of debt and being driven into the hands of loan sharks.

* Car scrappage - the scheme will be introduced next month enabling people to get 2,000 towards a new, less polluting car or van under 3.5 tonnes.

* White Paper on consumer rights - this will set out proposals to:

* provide further help to people in difficulty with their finances;

* strengthen the UK's credit regime; promote responsible lending and borrowing;

* raise standards in debt collection;

* and set a longer-term direction for the sector and its regulation that will deliver continuing access to affordable credit, enhanced consumer protection and financial stability.

* State pensions - the increase in Winter Fuel Payments announced in Budget 2008 will continue next year so that households with someone over 60 will receive 250 and over-80s households 400 in winter 2009-10. The State Pension is guaranteed to increase by at least 2.5 per cent next year.

* Mortgage Rescue Scheme - the scheme, which helps vulnerable households facing repossession, will be expanded from May 1 to also cover those in negative equity as a result of a fall in house prices.

* Repossessions' Prevention Fund - a new fund which will provide small loans to homeowners or tenants facing repossession, administered by Local Authorities.

* Stamp Duty - the holiday on stamp duty on purchases of properties under 175,000 to help first-time buyers is to be extended to the end of the year.

* 400 million to unblock stalled private sector house building. The new funding will help restart stalled construction sites by creating new partnerships with the private sector. This will help to deliver 9,000 additional homes, all of which will start on site in 2009-10. This will include up to 5,000 homes to help first time buyers, including the option to rent now and buy later, and up to 1,000 social rented homes.

The housing measures follow this week's announcement of support for homeowners to stay in their home through the Homeowners Mortgage Support (HMS) initiative. HMS will enable eligible borrowers who suffer a temporary loss of income to cut their mortgage interest payments for up to two years to help them get back on track with their finances.

Notes

1. Since 2006 more than 145,000 Growth Fund loans have been made totalling in excess of 63 million. These are loans to people on low incomes who might otherwise have turned to loan sharks or high cost doorstep lenders to meet their borrowing needs.

2. The Social Fund is administered by Jobcentre Plus. The additional funding amounts to 120m in 2009-10 and 140million in 2010 - 2011.

3. The Repossessions Prevention Fund will be administered by Local Authorities. These loans could be used to pay off mortgage arrears or secured charges where high interest rates are causing them to be unaffordable.

4. The Mortgage Rescue Scheme was announced on 2 September 2008. It has been available across England since 16 January 2009 following successful fast tracking by around 80 local authorities in December 2008.

5. Homeowners Mortgage Support - lenders covering more than 80 per cent of the mortgage market will now be providing enhanced support to homeowners at risk of repossession. Lenders offering HMS will have the security of a Govt guarantee if the borrower defaults. At the same time four other high street lenders have confirmed they will offer comparable arrangements to HMS to their customers while opting not to take up the Government guarantee. For more information on HMS go to http://www.direct.gov.uk/hms

6. Earlier this month, Government has also launched Moneymadeclear pilots in the North East and North West to provide in-depth support and guidance on a range of money matters, supporting people with their day to day money questions and worries and equipping them with the ability to manage their finances better now and for the future. See http://www.moneymadeclear.fsa.gov.uk for further information

7. The Financial Services Authority's Money Made Clear website can be found at: http://www.moneymadeclear.fsa.gov.uk

8. The Financial Services Authority's Money Made Clear telephone helpline number is: 0300 500 5000

9. The capital threshold in Pension Credit will be increased from 6,000 to 10,000 . The 10,000 limit will also be implemented for pensioners entitled to Housing and Council Tax Benefit. The average gain for eligible pensioners will be around 4 a week, and those on the lowest incomes could gain up to 8 a week. The change to the capital threshold will be introduced from November 2009.


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Crown Copyright. Material taken from the BERR- Department for Business, Enterprise and Regulatory Reform replacing DTI - Department for Trade and Industry. Reproduced under the terms and conditions of the Click-Use Licence.


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Article Published/Sorted/Amended on Scopulus 2009-05-12 13:25:09 in Tax Articles

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