By comparison with the 2012 Autumn Statement, Thursday is expected to be a lot less like a mini-Budget. Last year saw huge interventions in people’s personal financial situations, so what are we expecting to see affect people’s wallets this time around? The hope of course is that there will be a measure of respite for households who are still under intense pressure, and so far it would seem that the only real extensions to the measures already announced in the main Budget will be based around policies that were floated during the conference season by the Conservatives and Liberal Democrats.
We already know that individual personal allowances are due to go up to £10,000 in April next year. and will be linked to the CPI, or Consumer Prices Index to try and keep it in pace with the rate of inflation from April 2015. At the same time the higher rate of 40% income tax is going to be payable on incomes over £41,866 per year, with the threshold only going up by 1% per year, which means that over time more people will be paying the higher rate of tax.
An interesting option that will have to pass a vote in the Commons meanwhile is around a proposal to allow married couples to transfer up to £1000 of personal allowance between them, potentially saving up to £200 per year – as long as neither taxpayer is paying into the higher rate and the person transferring their allowance isn’t earning over that allowance already.
Other helpful measures include a rise in the maximum allowance for tax-free ISA accounts, and a rise in the state pension by 2.7% to match the CPI.
The Sting In The Tale
Austerity measures continue to bite and be noticeable most often by the people who are in the worst place to be affected by them. The 2012 Budget capped many of the benefits and tax credits schemes to one percent for three years, a stark contrast to the previous arrangements that at least kept the meagre levels of support in line with the cost of living. Income support, jobseekers allowance, housing benefit as well as working tax credits and child tax credits are all affected by this continued squeeze.
What is less reported is that this one percent increase will also affect statutory sick pay, maternity, paternity and adoption pay as well as the maternity allowance and child benefit. The only exceptions are those for people with disabilities and their carers, whose benefits are still tied to the CPI.
On the plus side, although also subject to a vote in the Commons, are plans by the Liberal Democrats to introduce free school lunches for all infants from September next year, and tax free vouchers for childcare for working parents that are planned for introduction around the same time.
The automatic rise in alcohol duty was abolished for beer in the last Budget but is still in place for wine and spirits, so we can expect those to rise by about four and a half percent.
Doubtless there will be a lot of fine detail to pore over when the actual speech is made on Thursday, but anyone hoping for measures to substantially aid those less well-off are probably going to be disappointed. Are you really surprised?