Express & Star

Autumn statement - what does it mean for you?

The Autumn Statement from Chancellor George Osborne let us know how the Government plans to tax us, and how they'll spend that money.

Published

After the initial flurry of excitement / disapproval at what the Statement contained - or didn't contain - thinkmoney.co.uk takes a look at how it could all affect the money in your pocket in 2013.

Petrol

The plan to raise fuel duty by 3p per litre next month was scrapped, so drivers will not see an immediate increase in the cost of fuel.

Benefits

Working-age benefits will rise by 1% in April 2013. This represents a pay-cut in real terms because the increase doesn't keeping up with the rising cost of living (the CPI measure of inflation is currently 2.7%).

Jobseekers' allowance is currently £71 per week so it's likely to rise by 71p a week - and child benefit is frozen until April 2014, when it will rise by 1%.

Tax allowance

Personal tax allowance is the money you can earn before you pay tax.

At the time of writing (financial year 2012 -13) you can earn up to £8,105 before paying tax. Then you pay 20% on the next £34,371 of income. A 'higher-rate' tax of 40% is applied to any income above £42,476.

It was announced that in April 2013, the personal tax allowance will rise to £9,440. Then 20% will be taxed on incomes above £9,440 - and up to £41,450. Any income above £41,450 will be taxed at 40% (the higher rate).

Lukewarm reception

Lower-income earners will pay less tax, but the Low Incomes Tax Reform Group (LITRG) has highlighted that people on low-to-middle incomes could lose much of what they gain when the 'Universal Credit' is introduced in 2013.

Technical Director, Robin Williamson commented: "Families on low to middle incomes will continue to pay for any future increase in the personal tax threshold with a corresponding decrease in their universal credit entitlement."

On the other hand, British Retail Consortium Director General Stephen Robertson said: "Raising personal tax thresholds will help hard-pressed households. Targeting lower-income households is right because they spend a greater proportion of their incomes and are struggling most."

Many people, however, will see their income creep into the higher-rate tax bracket. And the Trade Union Congress (TUC) General Secretary, Brendan Barber, commented: "Small gains on fuel and the personal allowance are dwarfed by the swingeing cuts to child benefit and tax credits that many millions of families rely on to get by."

Michael Ossei of price comparison website uSwitch.com said that the tax cuts - in many people's opinion - "simply don't go far enough to help households cope with rising living costs".

Elsewhere, the Chief Executive of the charity Family Action, Helen Dent, wanted Mr Osborne to do more to help struggling families. She commented: "He hasn't done enough to make work pay and ensure children with parents in and out of work are not pushed further into poverty."

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