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| Budget 2013: What we already know | Budget 2013: What we already know |
| (about 13 hours later) | |
| By Kevin Peachey Personal finance reporter, BBC News | By Kevin Peachey Personal finance reporter, BBC News |
| In December, we had the mini-Budget - more technically known as the Autumn Statement. Now we have Chancellor George Osborne's main Budget speech on the horizon. | In December, we had the mini-Budget - more technically known as the Autumn Statement. Now we have Chancellor George Osborne's main Budget speech on the horizon. |
| What this double-header means is that many of the changes that are likely to affect our personal finances have been announced already. | What this double-header means is that many of the changes that are likely to affect our personal finances have been announced already. |
| So, many of the ways in which our taxes and benefits are calculated will change in April, and individuals will have had time to prepare for it. | So, many of the ways in which our taxes and benefits are calculated will change in April, and individuals will have had time to prepare for it. |
| Mr Osborne may still make further changes that come into effect immediately after the speech, which usually lasts an hour. | Mr Osborne may still make further changes that come into effect immediately after the speech, which usually lasts an hour. |
| But here is what is known already. | But here is what is known already. |
Income tax | Income tax |
| In the current tax year, which ends on 5 April, people aged under 65 can earn £8,105 a year before they pay income tax. | In the current tax year, which ends on 5 April, people aged under 65 can earn £8,105 a year before they pay income tax. |
| Known as the personal allowance, this level will increase to £9,440 for the tax year 2013-14, starting on 6 April. | Known as the personal allowance, this level will increase to £9,440 for the tax year 2013-14, starting on 6 April. |
| This level was extended in the Autumn Statement, meaning that more lower-paid workers will not see their income taxed. | This level was extended in the Autumn Statement, meaning that more lower-paid workers will not see their income taxed. |
| The next £32,010 earned will be taxed at 20%, with the 40% tax band starting at £41,451. | The next £32,010 earned will be taxed at 20%, with the 40% tax band starting at £41,451. |
| Another big change in April is that income of more than £150,000 will face a 45%, rather than 50% tax rate. | Another big change in April is that income of more than £150,000 will face a 45%, rather than 50% tax rate. |
| Meanwhile, at present, pensioners earning less than than about £24,000 a year get a more generous tax-free allowance - £10,500 for 65-74 year olds and £10,660 for those aged 75 and over. That advantage gradually tapers off as income rises to about £29,000. | Meanwhile, at present, pensioners earning less than than about £24,000 a year get a more generous tax-free allowance - £10,500 for 65-74 year olds and £10,660 for those aged 75 and over. That advantage gradually tapers off as income rises to about £29,000. |
| From April, those allowances for anyone already aged 65 will be frozen, and the extra personal allowance will be scrapped for anyone who turns 65 after 5 April. This controversial move in last year's Budget was dubbed the "granny tax". | From April, those allowances for anyone already aged 65 will be frozen, and the extra personal allowance will be scrapped for anyone who turns 65 after 5 April. This controversial move in last year's Budget was dubbed the "granny tax". |
Benefits and pensions | Benefits and pensions |
| The benefits landscape will change significantly as a result of measures already highlighted by the government. | The benefits landscape will change significantly as a result of measures already highlighted by the government. |
| For example, a range of working-age benefits will rise by just 1% in April. That is lower than the rate of inflation and, consequently, a real-terms cut. | For example, a range of working-age benefits will rise by just 1% in April. That is lower than the rate of inflation and, consequently, a real-terms cut. |
| This affects benefits such as jobseeker's allowance - which will rise by 71p to £71 a week - employment and support allowance and income support. Maternity, paternity and adoption pay will also rise by 1% in April. | This affects benefits such as jobseeker's allowance - which will rise by 71p to £71 a week - employment and support allowance and income support. Maternity, paternity and adoption pay will also rise by 1% in April. |
| Other benefits, such as carer's allowance and some disability benefits will mirror inflation, with a 2.2% rise. | Other benefits, such as carer's allowance and some disability benefits will mirror inflation, with a 2.2% rise. |
| Meanwhile, a guarantee for the basic state pension means it will rise by 2.5% in April, taking it to £110.15 a week. | Meanwhile, a guarantee for the basic state pension means it will rise by 2.5% in April, taking it to £110.15 a week. |
| New rules, starting in April will affect housing benefit, which is paid to less well-off council and housing association tenants to help with rent. Typically claimants receive between £50 and £100 a week. | New rules, starting in April will affect housing benefit, which is paid to less well-off council and housing association tenants to help with rent. Typically claimants receive between £50 and £100 a week. |
| Families deemed to have too much living space by their local authorities will receive a reduced payment. Under the government's so-called "size criteria", families will be assessed for the number of bedrooms they actually need. The changes have been criticised as a "bedroom tax". | Families deemed to have too much living space by their local authorities will receive a reduced payment. Under the government's so-called "size criteria", families will be assessed for the number of bedrooms they actually need. The changes have been criticised as a "bedroom tax". |
| Changes to child benefit have already taken effect. | Changes to child benefit have already taken effect. |
| From January, families with one parent with a taxable income of more than £50,000 have lost some of the benefit, and it has been withdrawn entirely if one parent earns above £60,000. | From January, families with one parent with a taxable income of more than £50,000 have lost some of the benefit, and it has been withdrawn entirely if one parent earns above £60,000. |
| Child benefit is paid at the rate of £20.30 a week for the first child, and then £13.40 a week for each child after that. This rate is frozen until April 2014. | Child benefit is paid at the rate of £20.30 a week for the first child, and then £13.40 a week for each child after that. This rate is frozen until April 2014. |
| Tax credits - including child tax credit and working tax credit - will be uprated by 1% for three years from April 2013, apart from the basic and 30-hour elements where the uprating will not apply until 2014. | Tax credits - including child tax credit and working tax credit - will be uprated by 1% for three years from April 2013, apart from the basic and 30-hour elements where the uprating will not apply until 2014. |
Other tax issues | Other tax issues |
| Changes to tax residence rules come into effect in April. | Changes to tax residence rules come into effect in April. |
| These rules will effect the tax liability of many people who go to work overseas for a time, or those who come to the UK for the first time. | These rules will effect the tax liability of many people who go to work overseas for a time, or those who come to the UK for the first time. |
| The Annual Residential Property Tax will begin in April. It will be paid by companies that own high value residential properties. For example, an annual tax of £15,000 will be levied on properties valued at between £2m and £5m. | The Annual Residential Property Tax will begin in April. It will be paid by companies that own high value residential properties. For example, an annual tax of £15,000 will be levied on properties valued at between £2m and £5m. |
| The company car fuel benefit charge threshold is changing slightly. | The company car fuel benefit charge threshold is changing slightly. |
Savings | Savings |
| Savers have found it tough to get a decent return on their savings, given the economic climate and the situation that banks find themselves in. | Savers have found it tough to get a decent return on their savings, given the economic climate and the situation that banks find themselves in. |
| From 6 April, the overall annual limit for Individual Savings Accounts (Isas) will rise from the current level of £11,280 to £11,520, a rise of 2.1%. | From 6 April, the overall annual limit for Individual Savings Accounts (Isas) will rise from the current level of £11,280 to £11,520, a rise of 2.1%. |
| Half of this can be saved in a cash Isa, with the rest or the total amount able to go into a stocks and shares Isa. | Half of this can be saved in a cash Isa, with the rest or the total amount able to go into a stocks and shares Isa. |
Longer-term changes | Longer-term changes |
| The higher rate income tax threshold will increase by 1% a year in 2014-15 and 2015-16. That is below the level of inflation, and is likely to bring another 400,000 taxpayers into the 40% higher rate. | The higher rate income tax threshold will increase by 1% a year in 2014-15 and 2015-16. That is below the level of inflation, and is likely to bring another 400,000 taxpayers into the 40% higher rate. |
| The annual exemption from tax of any capital gains will increase by 1% a year in 2014-15 and 2015-16, to £11,000 from 6 April, 2014 and £11,100 in from 6 April, 2015. | The annual exemption from tax of any capital gains will increase by 1% a year in 2014-15 and 2015-16, to £11,000 from 6 April, 2014 and £11,100 in from 6 April, 2015. |
| Inheritance tax starts to be paid from an inheritance of £325,000 now. This was supposed to rise to £329,000 from April 2015 - the first increase since 2009 - but the chancellor changed his mind. It will now be frozen at its current rate until 2019 at the earliest. | |
For businesses | For businesses |
| A new, optional, cash accounting regime for self-employed individuals and some partnerships with cash receipts of less than £77,000 will be available from 6 April. | A new, optional, cash accounting regime for self-employed individuals and some partnerships with cash receipts of less than £77,000 will be available from 6 April. |
| This is intended to simplify the tax-reporting regime for small businesses. | This is intended to simplify the tax-reporting regime for small businesses. |
| Businesses will be restricted in setting certain income tax losses off against general income. From April, this will only be restricted to the greater of £50,000 or 25% of total income. | Businesses will be restricted in setting certain income tax losses off against general income. From April, this will only be restricted to the greater of £50,000 or 25% of total income. |
| From April, workers may able be able to trade in some employment rights for shares in a business. These shares will be exempt from capital gains tax. | From April, workers may able be able to trade in some employment rights for shares in a business. These shares will be exempt from capital gains tax. |
| How will these changes affect your finances? Send your comments and experiences using the form below. | How will these changes affect your finances? Send your comments and experiences using the form below. |