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Mortgage Interest Tax Relief and extra tax allowances for pensioners will be phased out after politicians overwhelmingly backed budget plans put forward by the Council of Ministers.
After a day of debate, just one amendment covering emissions duty on tractors was lost, which means duty rises on alcohol (up to 6.6%), cigarettes (6.7%) and petrol (2.1%) will all take effect from 1 January.
And although the long phasing approach will soften the blow, pensioners will see their current £3,000 tax bonus gradually disappear, while homeowners will stop getting a tax discount on the interest that they pay.
There is good news for families though, who will see an increase in the tax relief available for childcare from £12,000 to £14,000 – but top-earners paying at the 20% rate will see their allowances for children phased out.
In all, the tax and duty changes will make an extra £1.8 million for the States next year – but by the time that the mortgage relief and the pensioner’ allowance are gone, the total bonus to the States will be £7.5 million.
Treasury Minister Alan Maclean – in his first Budget debate as “chancellor” – told Members that the Budget was about a long-term plan.
He said: “This Budget is about the future, it’s about some difficult decisions today that will ensure a safe, secure and affordable future for our grandchildren and future generations.”
Budget proposals at a glance...
Income Tax…
- Standard exemption for marginal-rate payers goes up by 0.9% in line with inflation.
- Mortgage interest tax relief to be phased out over 12 years.
- Added exemption for pensioners to be phased out.
- Increase tax relief for child care from £12,000 to £14,000.
- For top earners at 20% rate allowances for children to be phased out.
- Reduction in relief for non-residents.
Duty increases…
- A bottle of spirits goes up 6.6% to a total of £13.83.
- A bottle of wine goes up 1.3% to a total of £1.47.
- A pint of beer goes up 0.9% to a total of 35 pence.
- A pint of strong beer goes up 4.9% to a total of 61 pence.
- 20 cigarettes goes up 6.7% to a total of £5.32.
- A litre of petrol goes up 2.1% to a total of 46 pence.
Vehicle Emissions Duty…
- Increase income from VED by hitting polluting vehicles.
- Discount for older vehicles cut.
- The 85% discount for hire car firms to be cut.
- VED to be worked out by emissions for commercial vehicles.
Plans for 2016…
- Options paper for independent taxation.
- Change Income Tax system for same-sex marriage.
- Continue work on Property Tax.
- Review 1(1)k tax system.
- Review Benefits in Kind.
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