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News - 3 January 2013

Changes we can expect in 2013

As the Government continues its attempts to cut the deficit and encourage growth, this will inevitably involve cuts in the amount of money available in our pockets in 2013.

Universal credit, child benefit, a cap on state support… The entire population will be affected by tax and benefit changes coming into law this year.

Here is a look at what it could mean during 2013.

Personal Tax Allowance

The personal allowance rises to £9,440 in April, which is actually higher than the Government originally announced.

At the other end of the scale, the 40% threshold stays at £41,450 – rather than rising with earnings or inflation.


ISA Allowance

Despite the Government spending cuts, the Exchequer has agreed to increase the ISA allowance for the 2013-14 tax year.

It’s going up to £11,520, of which up to half can be saved as cash.

Child Benefit

On January 7 2013, Child Benefit goes from being a universal benefit, to one that is sharply cut in homes where an adult earns more than £50,000 a year. The cut is being actioned on a sliding scale; for every £100 you earn above the £50,000 mark, you lose 1% of the payment.

If you’re affected, the taxman will have written to you, inviting you to either stop receiving the payment, or receive it but declare it in your tax return so that the money can be clawed back.

As for the rest of the population, due to a freeze in the benefit amount, the payment of £20.30 a week for the first child and £13.40 a week for any other children will stay the same regardless of inflation.


Universal Credit

The Universal Credit will be launched nationally in October for all new claimants, with all existing claimants being gradually moved onto the system between 2013 and 2017.

It replaces Income-based Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Child Tax Credits, Working Tax Credits and Housing Benefit.

That means it will be received by both working and non-working households, and has been designed to simplify the complex benefits system and make sure that work always pays.
 
However, there are some concerns. An impact report from the Department for Work and Pensions suggests that 2.8 million households will receive less money as a result.

Benefits Cap

From the 15 April, there will be a limit to the amount that working-age people can receive in state help, no matter how many children they have.

This cap is set at £350 a week for a single adult with no children and £500 a week for a couple or single parent.

State Pension

From April, the state pension will rise to £110.15 a week, which is an increase of 2.5%.

However, The Office for National Statistics has announced that the Consumer Prices Index measure of inflation rose to 2.7% in October, with some commentators suggesting that inflation is likely to reach 3% in the next few months, leaving pensioners facing a cut in their real income.

Disability Living Allowance

The Disability Living Allowance (DLA) is being scrapped in favour of a new system of Personal Independence Payment (PIP), which is based on an assessment of individual need.

From April 2013, new claims made in the north-west and north-east of the country will automatically be assessed for PIP instead of DLA and that will be rolled out to new claimants in the rest of the country from June

From October 2013 existing claimants of DLA will all be asked to make a new PIP claim and will be assessed against the new entitlement criteria.

Housing Benefit

From April next year, social tenants will see their housing benefit cut if they’re occupying a home that’s larger than they need.

This has been referred to as “The Bedroom Tax” because if you have a spare bedroom a reduction of 14% of the available benefit will occur, and two or more spare bedrooms will result in a loss of 25% of the benefit.


If you need any help and advice for your business on this or any other business related matter, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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