The UK Pre-Budget report which is published each autumn aims to set out the direction of Government policy in the run up to the spring Budget. In light of the current banking crisis the measures announced have been eagerly anticipated.
The following key elements from the pre-Budget report may affect frontier workers or those thinking of moving or retiring across the border. A detailed report is available from the Treasury website.
- All rates of National Insurance contributions are to be increased by 0.5% for all employees and employers from April 2011
- The rate of VAT is cut from 17.5% to 15% from 1 December 2008 until 31 December 2009
- A new 45% higher income tax rate is proposed for earnings above £150,000 from April 2011 - hitting about 1% of tax payers
- The £120 rebate for basic rate taxpayers, introduced in the wake of the 10p tax row, will be made permanent and increased to £145 from April
- The pension credit will be increased in April from £124 to £130 a week for individuals and from £189 to £198 for couples. State pensions also will rise in line with the highest rate of inflation, from £90.70 to £95.25 for a single person. Pension and child benefit increases will take effect in January, three months early, and every pensioner will get a one-off payment of £60 in January while couples get £120.
Northern Ireland has seen the biggest influx of cross border shoppers since the 1970s. Especially after a report in June from the National Consumer Agency Ireland which revealed that a basket of goods is 30% cheaper in Northern Ireland together with the reduction in the VAT rate to 15% a full 6.5% lower than in the south (the Irish Budget on 1 December 2008 increased VAT from 21 to 21.5%) is likely to have a huge impact on the number of cross border shoppers travelling north. This potential loss in revenue is obviously of great concern to the Irish Government.
The Minister of Finance Brian Lenihan has said an increase in the number of people travelling North of the border to do their shopping had made things “very, very difficult” when he was framing the Irish Budget. He said there was huge loss of revenue to Northern Ireland because of the number of goods and services being purchased there by shoppers from the Republic. The Minister said this substantial expenditure meant the Government would have to impose higher taxes for essential public services.
