Budget 2023: What it means for your money -Dlight News

Budget 2023: What it means for your money

Extra pension tax breaks for high earners, more free childcare for working parents and overall help with energy bills top the chancellor’s list of measures for consumers, householders and savers.

Pension allowances for higher earners Efforts to discourage early retirement will increase. The £40,000 limit on tax-free annual pension contributions – fixed for nine years – is being increased to £60,000.

A £1.073mn tax-free lifetime allowance on pension pots is being scrapped. The Chancellor went further than pre-budget leaks which suggested he could raise the limit to £1.8mn. He said: “No one should be pushed out of the workforce for tax reasons.”

Free childcare For working parents in England it is extended from three and four year olds to nine months old until their third birthday. Available for up to 30 hours a week, it will be phased in by September 2025.

Families on Universal Credit will receive childcare support up front rather than claiming it later, and will see the £646 monthly limit per child rise to £951 for one child and £1,632 for two.

The government will also increase the funding that nurseries receive for free hours, addressing concerns from providers, who have insisted that the money they receive per hour fails to cover costs. Meanwhile, after-hours care for school-age children will be expanded.

continued EnergyThe price guarantee, which covers a typical annual household energy bill at £2,500, will be extended for a further three months until the end of June – worth a total of £160 for the average household.

So households will not feel the full force of Ofgem’s price cap – which remains at £3,280 – for these three months. The Treasury says lower wholesale gas prices are expected to reduce household energy bills from July, while Cornwall Insight data suggests the Ofgem price cap for the typical household will drop to an estimated £2,100 a year.

Also, the energy premium for prepayment meters will be scrapped from July, saving four million poor households £45 a year. The government says the charges are comparable to direct debit energy charges.

However, as inflation increases, so does the effect of salaries Income tax will increase in real terms. The thresholds are not being lifted, so more people will pay basic and higher rates of income tax than before, as they are fixed until 2028.

As previously announced, the annual capital gains tax-free allowance will halve to £6,000 from April and to £3,000 in 2024, while those liable for CGT will pay up to £2,604 more than in the current tax year.

The allowance for dividends will fall from £2,000 to £1,000 in the new tax year, then to £500 from April 2024, bringing it to a tenth of the £5,000 allowance when it was introduced in 2016.

Alcohol duty Several changes announced in the budget will be affected. To help pubs, the chancellor increased draft relief, meaning tax on draft beer and cider will be up to 11p lower than the duty on similar products in supermarkets. This will also apply to pubs in Northern Ireland due to the Windsor Framework.

The chancellor also confirmed that alcohol duty will be raised in line with inflation from August, ending a years-long freeze on the tax. From August, the government is also set to introduce its long-awaited new alcohol taxation system, which will levy alcohol duty according to the strength of drinks across the board, raising taxes on strong red wine and ciders. Tobacco duty But will be uprated.

fuel duty A 5p per liter cut introduced by the Chancellor last year will be frozen for another year, with the chancellor extending it following rising prices following Russia’s invasion of Ukraine.

The chancellor is scrapping planned increases under the fuel duty “escalator”, which was intended to raise the levy every year, but has been frozen every year since 2011. The Treasury estimates the measures will save the average motorist £100 a year. Fuel duty is 52.95p per litre.

Promotion of Tax avoidance schemesContractors, freelancers and temporary workers would become a potential criminal offense under the proposals put forward in the budget.

The government said this would help up to 2.4 million contractors who may be involved in tax avoidance through agencies they trust to handle their tax affairs, only to face thousands of pounds in unexpected future tax bills and fines.

National Savings and InvestmentThe government-backed savings bank has been told to aim to issue £7.5bn worth of premium and savings bonds in 2023-24, as the Treasury tries to expand its funding sources.

Reporting by Mary MacDougall, Peter Campbell, Oliver Barnes, Lucy Warwick-Ching, Bethan Staton, James Pickford and Stephen Wagstill

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