NATIONWIDE GIVES CAUTIOUS BUDGET A CAUTIOUS WELCOME

22 March 2006

Nationwide has welcomed the Chancellor’s announcements in today’s Budget on Child Trust Fund and stamp duty.  However, the Society is disappointed that the Chancellor did not take the opportunity to

• bring stamp duty into line with rising house prices - had it been linked to house price inflation since 1993 the threshold would now be £190,000
• set out targets for improving Child Trust Fund take-up and announce top-ups for children when they reach secondary school
• outline his vision for tax free savings beyond 2010, when ISAs are scheduled to end

Child Trust Fund

Responding to the Chancellor’s announcement that Child Trust Funds will be topped up at age 7 with £250 (£500 for children from low income families), Nationwide executive director Stuart Bernau said,

“The Chancellor has at last confirmed that he will top-up the Child Trust Fund with £250 or £500 at age 7.  This is good news and, we hope, will encourage parents who have not yet invested their vouchers to do so.  We want the government to do more to encourage parents to use their vouchers and open a Child Trust Fund, including announcing further top-ups for older children.  We will also continue to lobby for equal tax treatment for the ten million children outside Child Trust Fund.”

Stamp duty

Stuart Bernau said,

“The stamp duty announcement is at least a step in the right direction but the size of the increase is disappointing.  Taking into account the bunching around the stamp duty thresholds, we estimate only around 30,000 buyers will benefit from this change, which still leaves the average buyer paying stamp duty.  Even first time buyers pay an average of more than £128,000 so will still be hit by this tax.”