How Does the Budget Affect Me?

March 22, 2013

Chancellor George Osborne delivered the 2013 Budget this week (March 20). With it came good and not-so-good news for the average household in the UK.

THE GOOD

Tax

  • Personal allowance, or the amount you can earn before basic-rate income tax applies, will be raised to £10,000 as of April 2014. This means three million workers will pay no income tax at all from this date.

Childcare

  • Families where both parents work, as well as single parents, will be eligible for tax-free childcare vouchers worth up to £1,200 a year from autumn 2015, providing they earn less than £150,000 per person. This will apply to around 2.5 million families, and will cover care for children under 12 years old. Those with more children and using child care a lot will get the most benefit.
  • An additional £200 million will be provided to increase childcare support in Universal Credit from April 2016.

Child Savers

  • Holders of child trust funds (CTFs) will be allowed to switch their money into the newer Junior Isas (Jisas), meaning better rates and cheaper investments. This will affect around six million people.

Motorists

  • The chancellor scrapped the fuel duty hike that was due to come in from September. The tax charged on fuel won’t rise, even if petrol prices do.

Buying a Home

  • A new scheme will be introduced from April 1st this year called Help-To-Buy, which will help first time buyers.  Borrowers who have a five per cent deposit will be offered a 20 per cent interest free loan on a new-build property worth up to £600,000. The loan will be repaid once the property is eventually sold.
  • The chancellor also announced that a Mortgage Guarantee scheme will be available from January. The Government will guarantee up to 15% of a mortgage, allowing people with 5% deposits access to lending.
  • People in social housing looking to purchase their home under the Right-to-Buy scheme have a shorter time to wait now, with the qualifying period dropping down from five years to three. Tenants will be entitled to a discount of up to £100,000 on the value.

Beer Drinkers

  • The 3p rise in beer duty has been scrapped, with the chancellor saying the alcohol duty escalator – which adds inflation plus 2% to the price – will be abolished for beer completely. Instead, there is a 1p cut in the price of beer. Duty rates on high strength beer will be reduced by 0.75% and low strength beer by 6%.

THE NOT-SO-GOOD

Families Where One Parent Stays At Home

  • The childcare vouchers only apply to families where both parents work.

Smokers

  • A packet of cigarettes will cost 26p more. Right now the average price is already a staggering £7.46 for a packet of 20.

Wine Drinkers

  • 10p will added on to the price of a bottle of wine.

Low-paid workers wanting to join a pension

  • The rise in personal income tax allowance may negatively affect low-paid workers hoping to be automatically enrolled in a company pension. The amount that workers must be earning is currently aligned to the personal allowance, which will rise to £10,000. According to Sackers, the pension law firm, this means more people will be excluded, affecting their ability to start putting money aside for a pension.