Brown unveils new Budget
Published On 21 March 2007
Chancellor Gordon Brown has unveiled details of his 11th Budget and it includes some new policies of particular interest to people with mortgages.Mr Brown began his speech by noting the current strength of the UK economy. He explained the economy is set to grow by between 2.75 and 3.25 per cent in the coming year and that inflation will drop back to government targets and remain stable in the future.
The chancellor also pointed out that before Labour took office in 1997, the UK was "bottom in the G7 for national income per head", but now the country was "second only to America".
As part of his Budget speech, Mr Brown unveiled policies which will be of special interest to people with mortgages and those who own property.
Inheritance tax thresholds will increase from their current levels of £285,000 to £350,000 by 2010.
Similarly, Mr Brown announced that all new homes up to a value of £500,000, which were deemed to be carbon neutral, would be exempt from any stamp duty until 2012.
However, the chancellor's decision not to change stamp duty rules for all homes has angered some commentators.
"House price inflation remains a key concern for everyone in the UK, particularly first-time buyers and so it is disappointing that this year's budget has not addressed the UK's 'out of date' stamp duty thresholds," said Duncan Berry, director of mortgage sales at GE Money Home Lending.
"What looks like Gordon Brown's last opportunity to alter the stamp duty bands will leave many disappointed, although it is encouraging to see that zero carbon homes will now be exempt from stamp duty up to the value of £500,000."
In a surprise move, the chancellor also said that he was cutting the basis rate of income tax by 2p to 20p from April 2008. However, as he also scrapped the 10p lower rate, it is unclear how much people will be better off because of the measure.
The chancellor also revealed policies that could impact on people's car insurance premiums. Fuel duty will increase inline with inflation but the road tax charged on the most polluting vehicles will rise to £400 from April next year.
In contrast, drivers who choose vehicles that pollute less will find themselves better off as the chancellor decided to cut the duty charged on these types of cars to just £35.
To further help the environment, Mr Brown said that the government would be introducing measures to help homeowners "take cost effective action to improve the energy efficiency performance of their homes".
Lenders responded favourably to the government's aim of reducing the environmental impact of the UK's homes.
"Abbey welcomes the government's drive to improve home energy efficiency and believes provision of personal loans specially designed for this purpose will support this positive environmental initiative," said Paul Morrish, the product executive of loans at the lender.
"Accordingly, Abbey is intending to launch a range of green loans to support home improvements to enhance home energy ratings."
