Chancellor delivers a Budget for ‘aspiration nation’, with higher personal allowance, encouragement for home ownership, help for drivers and a boon for beer drinkers.
Watch our video explaining the key changes affecting your finances in this year’s Budget and read more about the announcements made by the Chancellor.
Income tax changes
The Chancellor delivered on a pledge made in his first Budget of 2010, to increase personal allowance, the amount of income that is tax-free, to £10,000. He promised to do this by 2015, but will now reach this target a year earlier.
Tax-free Personal allowance, which is £8,105 for 2012/13, will rise to £9,440 in 2013/14 and £10,000 in 2014/15.
- Read more in about the personal tax changes from the 2013 Budget.
Flat-rate pension brought forward
The state pension overhaul, previously announced to start in 2017 will now begin in 2016. A flat-rate state pension of £144 will replace the current system of basic state pension (£107.45 in 2012/13) and second state pension (S2P), which varies according to how much you earn.
The new system does away with the need to claim pension credit for those who receive less than the minimum income guarantee. The new scheme applies to those who reach state pension age in 2016.
- Read more in about the changes to pensions and retirement from the 2013 Budget.
Benefits system overhauled
Universal Credit will be rolled out from October 2013 and will replace a number of benefits in the the existing piecemeal system by 2017.
The Chancellor emphasised increase support for childcare and pointed out the the government was also offering increased child support in the form of tax-free childcare vouchers, providing 20% of the first £6,000 of childcare costs for each child.
- Read more in about the benefits changes from the 2013 Budget.
Support for home purchase
A new Help to Buy scheme was announced, with government providing £3.5bn to shared equity housing schemes. These will provide interest-free loans of up to 20% of the value of new build properties. This is available to all, not just first-time buyers.
The government will also encourage mortgage lenders to support higher loan to value customers, with a three-year £130bn government ‘mortgage guarantee’.
- Read more in about the changes to housing and property from the 2013 Budget.
Consumers under pressure
The Chancellor’s fourth Budget comes at a time of increasing financial pressure. Recent Which? research into consumer attitudes reveals that one in three people are finding it difficult to live on their current income.
Some 35% of those polled had cut back their spending on essentials during February, while 26% had dipped into savings to cover their monthly spending. Top worries for consumers were fuel prices (86%), energy prices (85%) and food prices (79%).
The Chancellor announced the scrap of the planned fuel duty rise, and a decrease in duty on beer, to the delight of pint holders across the country.
- Read more in about help with the cost of living from the 2013 Budget.