There were no changes to rates of income tax announced in the Budget for 2013-14.
Allowances and tax bands
Already announced previously were the tax and NI bands for 2013-14.
The 2013-14 personal allowance will be £9,440, with the upper limit of the basic rate tax band (ie the level of income at which people start to pay tax at 40%) reduced to £32,010.
Comment: This means that most people with straight forward tax affairs and no benefits in kind (for example, cars or health insurance) should have a tax code of 940L taking effect in April 2013.
Other allowance levels can be found on the HMRC web site at http://www.hmrc.gov.uk/rates/it.htm
The Chancellor announced in the budget that the personal allowance for 2014-15 will increase to £10,000, bringing the threshold up to that promised in the Lib Dem manifesto at the last election.
The upper limit of the basic rate band will be £31,865 for 2014-15.
Tax relief of childcare
A new childcare scheme will be introduced to support working families with their childcare costs.
For childcare costs of up to £6,000 per year per child, support of 20% will be available worth up to £1,200. From the first year of operation, all children under 5 will be eligible and the scheme will build up over time to include children under 12.
The scheme will provide support for families where all parents are in work and not receiving support through the Childcare Element of Working Tax Credits/Universal Credit, or where one has an income over £150,000. Support will be provided through a childcare account redeemable at any registered childcare provider.
The new scheme offer will be phased in from Autumn 2015 as the current system of Employer Supported Childcare is phased out.
There are two types of Tax Credits; Working Tax Credit (WTC) and Child Tax Credit (CTC). The CTC is potentially available to families who have responsibility for one or more child.
There were no changes to tax credits announced in the Budget 2013. Changes to the rates of payments were announced previously and can be found at http://www.hmrc.gov.uk/rates/taxcredits.htm
Child Benefit changes announced previously came into effect from 7 January 2013.
These rules mean that, once the income of one of the parents reaches £50,000, 1% of the Child Benefit award will effectively be lost for every £100 of that parent’s income between £50,000 and £60,000 and at £60,000 of income, any remaining benefit will be withdrawn.
The actual mechanics of the scheme is that Child Benefit will continue to be paid and an additional tax charge will be levied on the parent earning over £50,000. Alternatively, the tax payer can elect not to receive Child Benefit.
Individual Savings Accounts (ISAs)
The ISA threshold for 2013/14 will be £11,520, of which £5,760 may be in cash.
As of Budget day 2013, you still have a couple of weeks to use your 2012-13 allowance of £11,280 (of which £5,640 may be in cash) – the deadline is 5 April 2013.
Junior ISAs will have an investment limit of £3,720 (previously £3,600) per annum.