This afternoon Chancellor George Osborne has presented his 2013 Budget to the House of Commons and the awaiting nation.
Recent Budgets have seen savers hit hard; annual pension allowances have been slashed and the lifetime pension allowance cut, so how will today's announcement affect you?
Below we have provided a summary of the main changes in this year's announcement. The full details of the Budget can be found on the HM Treasury website, including infographics which explain some of the key statistics and measures in a graphical format.
In the current tax year, which ends on 5 April, those under the age of 65 can earn £8,105 a year before they pay income tax. Known as the personal allowance, this level will increase to £9,440 for the tax year 2013-14, starting on 6 April. This level was extended in the Autumn Statement, meaning that more lower-paid workers will not see their income taxed.
The next £32,010 earned will be taxed at 20%, with the 40% tax band starting at £41,451.
Another big change this April is that income of more than £150,000 will face a 45%, rather than 50% tax rate.
2014 will see the government raise the amount of money workers can earn tax free to £10,000 benefiting 24 million basic rate taxpayers. This increase in the income tax threshold is anticipated to mean £700 less tax will be paid by working families.
Impact of changes to Income Tax and National Insurance
| Income || Income after tax || Change |
| Before 6 April 2013 || After 6 April 2013 |
| £10,000 || £9,334 || £9,619 || 3.10% |
| £20,000 || £16,134 || £16,419 || 1.80% |
| £30,000 || £22,934 || £23,219 || 1.20% |
| £40,000 || £29,734 || £30,019 || 1% |
| £50,000 || £35,781 || £35,964 || 0.50% |
| £70,000 || £47,381 || £47,564 || 0.40% |
| £100,000 || £64,781 || £64,964 || 0.30% |
| £130,000 || £78,939 || £78,588 || -0.40% |
| £150,000 || £90,539 || £90,188 || -0.40% |
| £200,000 || £114,539 || £116,688 || 1.90% |
| £500,000 || £258,539 || £275,688 || 6.60% |
| Source: Ernst and Young |
Meanwhile, at present, pensioners earning less than £24,000 a year get a more generous tax-free allowance - £10,500 for 65-74 year olds and £10,660 for those aged 75 and over. That advantage gradually tapers off as income rises to about £29,000.
From 6 April, those allowances for anyone already aged 65 will be frozen, and the extra personal allowance will be scrapped for anyone who turns 65 after 5 April. This controversial move in last year's Budget was dubbed the "granny tax".
Other tax issues
Changes to tax residence rules come into effect on 6th April.
These rules will affect the tax liability of many people who go to work overseas for a time, or those who come to the UK for the first time.
The Annual Residential Property Tax will begin on 6 April. It will be paid by companies that own high value residential properties. For example, an annual tax of £15,000 will be levied on properties valued at between £2m and £5m.
The company car fuel benefit charge threshold is changing slightly.
Osborne also said stamp duty will be abolished for UK funds and shares traded on growth markets such as the AIM to encourage investment in the country’s smallest businesses and reduce the UK’s perceived bias towards debt financing rather than equity.
Savers have found it tough to get a decent return on their savings, given the economic climate and the situation that banks find themselves in.
From 6 April, the overall annual limit for Individual Savings Accounts (ISAs) will rise from the current level of £11,280 to £11,520, a rise of 2.1%.
Half of this can be saved in a Cash ISA, with the rest or the total amount able to go into a Stocks and Shares ISA.
Chancellor George Osborne has set out plans to allow parents to transfer Child Trust Funds to Junior ISAs, potentially unlocking £4.8billion in a move that could affect the savings of six million youngsters. A 12-week consultation on how to allow the transfer of Child Trust Funds to Junior ISAs, will now take place. These transfers could be voluntary or mandatory. Previously those with a child trust fund – children born between September 1, 2002, and January 2, 2011 – have not been entitled to open a Junior ISA or transfer their cash to one.
In a boost for thousands of elderly people who lost up to half their life savings when Equitable Life came close to collapse a decade ago, they have now been told they will receive compensation. Policyholders over the age of 60 who bought annuities from the world’s oldest insurer before September 1992, who have previously been excluded from a repayment scheme, will receive up to £10,000 each. In today’s announcement, those over the age of 60 will get £5,000, with an additional £5,000 for those in receipt of Pension Credit.
The higher rate income tax threshold will increase by 1% a year in 2014-15 and 2015-16. That is below the level of inflation, and is likely to bring another 400,000 taxpayers into the 40% higher rate.
The annual exemption from tax of any capital gains will increase by 1% a year in 2014-15 and 2015-16, to £11,000 from 6 April, 2014 and £11,100 in from 6 April, 2015.
Benefits & Pensions
Announced previously, a guarantee for the basic state pension means it will rise by 2.5% in April, taking it to £110.15 a week.
The Government has also announced it is to bring forward its plans for a £144 a week flat-tier pension and a £72,000 cap on long-term care costs by a year.
Both measures will now be introduced in 2016. The current full state pension is £107.45 a week but can be topped up to £147.70 with the means-tested pension credit and a state second pension which is based on National Insurance contributions. Those who qualify for the state pension before April 2016 will continue to receive their current entitlement.
Last month the Government confirmed the reform of long-term care would be partly funded by increased employer National Insurance contributions as a result of the abolition of contracting-out.
The care costs cap will also be partly funded by extending the freeze on the inheritance tax threshold at £325,000 for individuals and £650,000 for couples for three years from 2015.
The benefits landscape will change significantly as a result of measures already highlighted by the government.
For example, a range of working-age benefits will rise by just 1% in April. That is lower than the rate of inflation and, consequently, a real-terms cut.
This affects benefits such as jobseeker's allowance - which will rise by 71p to £71 a week - employment and support allowance and income support. Maternity, paternity and adoption pay will also rise by 1% on 6 April.
Other benefits, such as carer's allowance and some disability benefits will mirror inflation, with a 2.2% rise.
| Benefit || Change |
| Working-age benefits including jobseeker's allowance, employment and support allowance and income support || 1% rise in each of the next three years, from April 2013. Lower than the 2.2% that might have been expected. |
| Child benefit || Frozen until April 2014. Will rise by 1% in each of the next two years |
| Maternity, paternity and adoption pay || Rise by 1% in each of the next three years. |
| Carer's allowance and disability benefits || Will rise in line with inflation, by 2.2% in April. |
| Child tax credits and working tax credits || To rise by 1% in each of the next three years, although some will be frozen in 2012-13. |
| Local housing allowance || Capped at a 1% rise for each of the two years from April 2014 |
| Basic state pension || Under government guarantee, will rise by 2.5% in April |
| Additional state pension || Up 2.2% in April, in line with inflation |
New rules, starting on 6 April will affect housing benefit, which is paid to less well-off council and housing association tenants to help with rent. Typically claimants receive between £50 and £100 a week.
Families deemed to have too much living space by their local authorities will receive a reduced payment. Under the government's so-called "size criteria", families will be assessed for the number of bedrooms they actually need. The changes have been criticised as a "bedroom tax".
Changes to child benefit have already taken effect.
January 2013 saw families with at least one parent with a taxable income of more than £50,000 lose some of their benefit, and it has been withdrawn entirely if one parent earns above £60,000.
Child benefit is paid at the rate of £20.30 a week for the first child, and then £13.40 a week for each child after that. This rate is frozen until April 2014.
Tax credits - including child tax credit and working tax credit - will be uprated by 1% for three years from 6 April 2013, apart from the basic and 30-hour elements where the uprating will not apply until 2014.
Announced yesterday, parents with children under 12 will receive a 20 per cent tax rebate for childcare costs from autumn 2015, amounting to £1,200 per child for 2.5 million families.
A new, optional, cash accounting regime for self-employed individuals and some partnerships with cash receipts of less than £77,000 will be available from 6 April.
This is intended to simplify the tax-reporting regime for small businesses.
Businesses will be restricted in setting certain income tax losses off against general income. From April, this will only be restricted to the greater of £50,000 or 25% of total income.
From April 2013, workers may able be able to trade in some employment rights for shares in a business. These shares will be exempt from capital gains tax.
Chancellor George Osborne has today confirmed private sector employers will be allowed to pass on the cost of losing the contracting-out rebate to employees.
The Government will allow private sector employers who contracted-out to adjust pension benefits to take account of the loss of the 3.4 per cent National Insurance rebate resulting from the introduction of the £144 a week single-tier state pension in 2016. Public sector employers will be forced to absorb the loss of the rebate.
A newly introduced “employment allowance” will mean companies will not have to pay the first £2,000 in employer National Insurance contributions in a bid to help small businesses.
The employment allowance would see 450,000 small businesses paying no “jobs tax” at all.
The rate of Corporation Tax will fall to 21% in April 2014 to 20% in 2015. Corporation tax was previously charged at a rate of 28 per cent when the coalition Government came to power.
The Chancellor stated the reduction would be offset by an increase to the bank levy to 0.142%. A reduction to 20% would mean Britain will have the lowest business tax rate of any major economy in the world.
George Osborne has erased next month's 6p rise in the cost of a pint of beer, also abolishing the "alcohol duty escalator" where prices for beer, wine, cider and spirits automatically rise by 2% above inflation every year. Beer duty will be cut by 1p. The rise for other forms of alcohol will remain.
The 3 pence rise in fuel duty due in September will not go ahead.
Government Spending Cuts
Government departments will have to cut their spending by a further 2% over the next two years. This additional 2% in departmental cuts - which come on top of the 3% spending reductions announced for the next two years in last year's Autumn Statement - will be used to boost capital spending. This move is expected to raise about £2.5bn of extra money earmarked for infrastructure projects.
Health, schools, overseas aid and HM Revenue and Customs will be protected from the cuts. Councils and police budgets will be protected for the first year, but other Whitehall departments will be told to find one per cent savings on their day-to-day budgets for each of the two years 2013-14 and 2014-15.
The government has announced a new “Help To Buy” homes scheme. There are two proposed components: £3.5bn in capital spending over three years to provide shared equity loans; and a loan of up to 20% of a home's value to be offered to people looking to move up the ladder.