BUDGET HELPS
THE UNDER 65s.
There was good news for people under 65 in this week's Budget. From April 2014 they will be able to have an income of £10,000 a year before a penny of income tax is due. The Coalition had always promised that the personal tax allowance would rise to £10,000 by the end of the current Parliament. But the Chancellor's announcement brought that forward by a year to 2014/15. It will save most taxpayers £112 a year off their bill.
But as with the bigger tax cuts that start this April, most over 65s are excluded. Their tax allowances of £10,660 for those born before 6 April 1938 and £10,500 for those born 5 April 1938 to 6 April 1948 remain frozen in 2013/14 and 2014/15. Indeed they will never rise. Instead they will vanish when the personal allowance rises to more than those levels. On present trends that could be as soon as 2016/17 or the year after.
Two groups of over 65s will gain from the higher personal allowance. First those whose income is around £30,000 or more who do not get any of the higher allowance because their income is too high. Second anyone who became 65 on 6 April 2013 or later. They do not get the age related allowances and never will.
Pensions
The new flat rate state pension will now begin in April 2016, a year earlier than the date confirmed by the Pensions Minister just over a week ago. That means the new single tier pension of around £144 a week will be extended to about 400,000 people who would have missed the new pension if it had started in 2017. Most of them will be men - the ones born between 6 April 1951 and 5 April 1952 - together with about 85,000 women born between 6 April and 5 July 1953. Many of them - especially the women - will now get a bigger pension under the new system. Those who would get less will have their entitlement under the old scheme preserved.
But for two groups it is not such good news. First, when the new pension begins, the means-tested pension credit will also be changed and that will now start in April 2016. That could mean £18 a week less help for some who retire on low incomes with few savings. Second, people in work who are paying into a good, salary related pension scheme will pay more National Insurance from April 2016. Their contributions will rise by 1.4% of their pay. That will bring a £5.5 billion windfall in for the Chancellor a year earlier.
Duties
There was good news for people who rely on their car for transport - the 3p rise in fuel duty planned for September has been cancelled. And the 'escalator' which scheduled annual rises ahead of inflation will no longer be used.
But the big surprise was the cut in the duty paid on beer. It will not rise ahead of inflation and in fact will be cut from Sunday. That will be worth around 1p off a pint of beer. With the average price around £3 that means once you have drunk 299 pints the 300th will be free. Cheers.
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