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from The Great Debate UK:

The devil will be in the Budget detail

fay-- Fay Goddard is chief executive of The Personal Finance Society. Any opinions expressed are her own. --

Though it’s a cliche to say that a budget is eagerly awaited you can be forgiven for saying so this time around. This year all eyes and ears will be focused on the Chancellor’s economic figures and forecasts. The big question is how will he balance the books – cut public spending or raise taxes? In the run up to an election cuts are ideal but needs must. What will it mean for personal finances?

One of the big questions being asked is whether Chancellor Alistair Darling will do anything to help the plight of savers. Some of the hardest hit by the drop in interest rates have been pensioners relying on savings generated income. It seems likely they will receive some support with whispers suggesting an increase in the pensioners’ tax allowance but this will do little for the majority affected. There is also speculation that the ISA limit of £7,200 will be raised in an effort to attract more savers. Action savings is a delicate balancing act as the Chancellor is understood not to want to reduce consumer spending in such a way that it slows the recovery.

A new top rate of income tax, as announced in the pre-Budget report, is expected – though whether it remains the same as the 45 percent rate for incomes over £150,000 (effective from 2011) remains to be seen. There are rumours that the threshold could be lower (perhaps £100,000), whereas others have suggested the rate will be higher (50 percent).

Pre-budget report: what it means for personal taxes

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Here is a guide on what the pre-budget report means for personal taxation by accountancy firm BDO Stoy Hayward. Income tax – changes to allowances and rates

The basic personal allowance for 2008/09 was increased above inflation from £5,225 to £6,035 as a one off measure to compensate for the loss of the 10 per cent starting tax rate.

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