Chancellor George Osborne has revealed the ins and outs of this year’s budget.
In terms of benefits, the amount received by families is set to rise next month as per the rise in inflation. As a result, maternity benefits, child benefits, jobseeker’s allowance and many others are set for a small jump.
Unfortunately it will be the first time that benefits won’t be increasing in line with the Retail Prices Index (RPI), which BBC News suggests has always been “more generous” – it will be increased in line with the Consumer Prices Index.
Corporation tax has been cut down to 24 per cent – with a view to slashing it to 22 per cent by 2014 – while VAT loopholes will be closed, meaning sports nutrition drinks and hot takeaway products will be just a little bit dearer.
For those under 65, a rise in personal allowance measures means that from 6 April, the amount someone can earn tax free will be increased to £9,205. The rise in personal allowance has been welcomed by those who work from home and in freelance jobs, but Jeff Brazier, managing director of PCG, believes more should have been done.
“This budget contains little to significantly help freelance business. Specifically, IR35 is not clarified further and a new consultation raises deep concerns over the future of interims and some freelancers.
“In general terms we welcome the rise in the personal allowance but are disappointed that important areas such as a further freeze or reduction in fuel duty did not happen,” he added.
BUDGET 2012: A quick lowdown of the budget and how the changes might affect you:
Tax Credits: From 6 April 2012, there will be a lower income limit for Child Tax Credit and new working hours rules for Working Tax Credit.
- Lower Income Limit: At the moment, the income limit to be eligible for Tax Credits was £41,300. The new limit from 6 April will be £26,000 if you have one child, or £32,000 if you have two children. You may still qualify if you pay for registered childcare, are disabled, or have more than two children.
- New Working Hour Rules: Currently, to be eligible for Working Tax Credits you have to work at least 16 hours. From 6 April, your weekly hours must be at least 24 hours if only one of you works, or if you both work, one of you must work at least 16 hours and your joint weekly hours must be at least 24.
- If your income goes down: If your income this current tax year is lower than last year, you may be entitled to more tax credits. However, if your income goes down by more than £2,500 they will ignore the first £2,500 of the reduction to work out your new entitlement.
- ’50 Plus’ Element: If you currently receive the ‘50 Plus’ Element of the Working Tax Credits, from 6 April this will end. You will also need to be working at 16 hours, otherwise your payments could stop altogether.
- Changes to how far payments can be backdated: For new claims, you currently have three months to get your claim in. From 6 April, this will be reduced to one month. So if you are a new mum, get your claim in quickly, then search around for local cost-effective childcare.
- Patent Box: Small firms which have patented a product will be able to benefit from the so-called Patent Box. Coming into effect from April 2013, the Patent Box is a reduced level of corporation tax on profits attributed to patents and similar types of intellectual property.
- Young entrepreneurs: Under a one-year pilot scheme to be launched by March 2013, up to 7,000 young entrepreneurs aged between 18 and 24 will be able to apply to borrow between £5,000 and £10,000 to back their business idea.
- Business Loans: A new £20bn ‘National Loan Guarantee Scheme’ (NLGS). Small businesses will be able to access loans with interest rates one percentage point lower than those available outside the initiative. The Federation of Small Business has given the scheme a warm welcome, however small firms have complained that their main problem isn’t the interest rate, but getting banks to grant a loan in the first place.