Every March a new Budget is released, and we get steamed up or excited (or a bit of both) about the changes it promises. But many of those amendments won’t come into force for at least another 12 months.
The way things are happening in the economic world at the moment, a lot can happen in the next year! In terms of day-to-day living, what we really care about are the changes that affect us now.
So which tax and benefits changes can we expect immediately?
There are 38 tax and benefit changes that came into effect on 6 April 2012, although it will take time until we feel the impact of some of these (because they alter the rules about how rates/thresholds will be increased in the future).
Those with immediate impact include:
- The Personal Tax Allowance has risen from £7475 to £8105
- For a couple to claim Working Tax Credit, their combined weekly working hours must now be at least 24, with one of them working at least 16 hours (although there are some exemptions)
- For families claiming Child Tax Credit, the Family Element of £545 is no longer protected until you’re earning over £40,000 – it will be withdrawn at the same rate as other elements.
- The threshold at which graduates have to make repayments on their student loans has risen to £15,795.
- If you are over 50 and returning to work, the 50+ element of Working Tax Credit has been removed entirely.
This report from Credit Action gives more details on the above and sets out all the remaining changes from April this year.
Unfortunately, the majority of changes are ones that will have a negative impact on our finances – not great news when things are already so tight for many of us.
However, the really important thing is to evaluate how the changes will affect your household and adjust your budget accordingly.
It’s hard when you’re doing all you can to provide for your family and you feel like you’re continually cutting back on something – but creating a budget that balances is vital to surviving the current economic troubles and being able to benefit from the recovery as and when it finally arrives!
Liz Dunscombe, from the money education charity Credit Action, is mum to a pair of rather tall, adult (well in age anyway!) boys. Her passion is helping people to manage their money well, and watching the transformation that a well-constructed budget can bring to a family.