Our Budget 2011 web chat saw your questions answered by our panel of experts.
Chancellor George Osborne’s Budget left many wondering whether they would be better off or counting the cost.
So we put together a panel of experts to answer your questions on property, pensions, motoring, personal finances and tax.
Pensions
Readers asked if the chancellor’s proposal to merge the National Insurance (NI) and income tax systems would leave pensioners paying more.
Pensioners currently pay tax on their income but not NI.
Our pension expert John Lawson, of Standard Life, said the chancellor had talked about integrating the operation of NI and income tax, not necessarily merging the two taxes.
There were also questions about new rules regarding annuities and how you can access your pension pot without the need to purchase an annuity.
Unisex annuities
A recent European court decision will see unisex annuity rates become compulsory in December 2012 so annuity rates for men could drop by 1-3 per cent as a result of this change.
Lawson said: “However, long-term interest rates are the main driver of annuity rates, so if interest rates have to rise, for example because of rising inflation, it is likely that annuity rates may begin to rise also.
“My guess is that there is likely to be a small upward increase in long-term interest rates and therefore annuity rates.”
One 49-year-old reader who is being made redundant asked whether he should take his work pension early.
In Lawson’s opinion, keeping your pension for longer particularly if you are in good health was a preferred option as if you take it early your pension will end up paying out less over the years.
Property
Melanie Bien from independent mortgage adviser Private Finance answered your property questions.
In his Budget speech, the chancellor unveiled the FirstBuy scheme which will see the government and developers put down a deposit of 20 per cent on a home while buyers put down 5 per cent. The scheme is for new-build properties.
Bien said: “No developers or lenders have volunteered to take part in the scheme yet. So we don't know which developments will be participating in the scheme but expect they will be across the country.”
Fix or track?
Reader Sandra asked if she should opt for a fixed or a tracker mortgage.
Bien said: “If you need the security of knowing how much your monthly mortgage payments will be and are worried about interest rate rises, then a fixed rate makes sense.
“A two-year fix will be slightly cheaper than a five-year fix but if interest rates start rising chances are you will need to remortgage again just when rates are higher, which will be expensive.
“A five-year fix gives you peace of mind for a longer period of time plus they are very competitively priced.”
Bien added that if buyers can put down a 25 per cent deposit instead of 20 per cent, then they will get a better pick of the rates.
Motoring
We had two experts: Steve Fowler, editor of What Car? Magazine and Gareth Kloet, head of car insurance here at Confused.com.
Pricey car insurance renewal
One reader was unhappy that her granddaughter had received a motor insurance renewal notice of £1,980 for a car that was purchased for £650, despite a one year's no-claims bonus.
But Kloet explained that while the premium may seem high it also covers her granddaughter for any accidental damage or injury that she may cause to third parties.
He added: “In addition, insurers may also have to cover damage to third-party vehicles, property and legal fees and as a result, these factors will also impact the cost of the premium.
“Vehicle value is just one rating factor that insurers have to consider.” See how car insurance is worked out here.
Fowler suggested the driver restrict the miles she drives and keep the car on a driveway to lower the premium.
Fowler also advised a reader who asked if he should buy roadside recovery from a well-known company or a smaller but much cheaper one.
“In many cases your so-called big name recovery company employs many of the smaller operators to go out to its customers, so it wouldn't bother me to go with a smaller recovery company.
“You might end up getting the same sub-contractor coming out to you whoever you choose.”
Personal finance and taxation
Our expert Anita Monteith from the Institute of Chartered Accountants answered questions on inheritance tax, income tax and savings.
The personal tax allowance - the minimum anyone can earn before they are taxed - is due to rise by £1,000 to £7,475 in April, and then increase to £8,105 in 2012/13.
One of the government’s key aims is to increase the income tax personal allowance to £10,000.
Monteith recommended HMRC’s website for anyone with questions about personal tax allowances.
