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-	Cautious consumers' repayments on credit cards, loans and overdrafts outstripped new borrowing by �305m in February, figures show.	+	More and more people on "relatively modest salaries" are being dragged into becoming higher-rate taxpayers, Budget analysis suggests.
-	This safety-first approach had led to a contraction in borrowing through loans and overdrafts for more than three years, major banks said.	+	The number of higher rate taxpayers, who pay a chunk of their income at the 40% tax level, could rise from 3.7m last year to 5m by 2014.
-	The figures, from the British Bankers' Association (BBA), showed a slowdown in activity in the mortgage market.	+	The Institute for Fiscal Studies (IFS) made the prediction after studying changes to tax levels in the Budget.
-	It said remortgaging levels were at their lowest for 13 years.	+	However, lower-income families will benefit from the changes.
-	'Difficult economic times'	+
-	Despite their cautious approach, consumers still spent �7bn on credit cards in February - a similar level as the previous six months, the figures show.	+	In the Budget, the government also decided to end age-related tax allowances for pensioners.
-	Repayments outstripped new borrowing on credit cards by �39m in February. The repayment in unsecured lending was driven by weak demand, and continued payback, of loans and overdrafts.	+	The IFS said that move will cause pensioners to lose 0.25% of their income in 2014.
-	Unsecured lending by the banks contracted by 1.8% in the 12 months to February.	+	'Millionaires pay less'
-	"Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing," said BBA statistics director David Dooks.	+	Shadow chancellor Ed Balls criticised the changes to pension allowances.
-	Mortgage dip	+
-	In the housing market, gross mortgage lending by the banks stood at �7.9bn in February, which was 1.9% lower than the same month a year earlier.	+	"The fact is the normal increase in the state pension just keeps up with inflation, but cuts to personal allowances in the Budget will mean 4.4 million pensioners are worse off in real terms," he said.
-	With interest rates set to stay at low levels for some time, the number of remortgaging approvals dropped to its lowest level for 13 years at 18,147. Lenders have also become more choosy about who they accept for remortgaging.	+	"It's now even clearer that this was a Budget that asked millions to pay more so millionaires could pay less."
-	The number of mortgages approved for house purchases also fell to 33,103 in February. The average mortgage approved was �146,600.	+	But Chancellor George Osborne told the BBC that no pensioner would be worse off in cash terms, including the "largest increase in the state pension" next month.
-	The BBA said that there had been a jump in activity at the start of the year as first-time buyers tried to get on the property ladder before a 1% stamp duty charge for homes valued between �125,000 and �250,000 is reintroduced on Saturday.	+	"The net changes made by this government, including introducing this triple lock, mean that pensioners are better off."
-	However, activity returned to more "normal" levels in February, said the group which represents the High Street banks.	+	The tax-free chunk of income, known as the personal allowance, is rising for the under-65s to �9,205 in April 2013.
		+
		+	The IFS said this would cost the Treasury an estimated �3.5bn, and would mean 675,000 fewer people would pay income tax.
		+
		+	From 6 April, people earning taxable incomes of up to �34,370 will pay 20% in tax and people earning between �34,371 and �150,000 are taxed at 40%.

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Revision as of 20:08, 30 January 2013

More and more people on "relatively modest salaries" are being dragged into becoming higher-rate taxpayers, Budget analysis suggests.

The number of higher rate taxpayers, who pay a chunk of their income at the 40% tax level, could rise from 3.7m last year to 5m by 2014.

The Institute for Fiscal Studies (IFS) made the prediction after studying changes to tax levels in the Budget.

However, lower-income families will benefit from the changes.

In the Budget, the government also decided to end age-related tax allowances for pensioners.

The IFS said that move will cause pensioners to lose 0.25% of their income in 2014.

'Millionaires pay less'

Shadow chancellor Ed Balls criticised the changes to pension allowances.

"The fact is the normal increase in the state pension just keeps up with inflation, but cuts to personal allowances in the Budget will mean 4.4 million pensioners are worse off in real terms," he said.

"It's now even clearer that this was a Budget that asked millions to pay more so millionaires could pay less."

But Chancellor George Osborne told the BBC that no pensioner would be worse off in cash terms, including the "largest increase in the state pension" next month.

"The net changes made by this government, including introducing this triple lock, mean that pensioners are better off."

The tax-free chunk of income, known as the personal allowance, is rising for the under-65s to �9,205 in April 2013.

The IFS said this would cost the Treasury an estimated �3.5bn, and would mean 675,000 fewer people would pay income tax.

From 6 April, people earning taxable incomes of up to �34,370 will pay 20% in tax and people earning between �34,371 and �150,000 are taxed at 40%.