New tax year brings in tax and benefit changes
Significant tax and benefit changes, which come into force with the beginning of the 2012/13 tax year on 6 April, will affect millions of families around the UK, according to Government and opposition figures.
Amongst the biggest changes is the increase in the income tax personal threshold – the amount of income that can be received tax-free – which is to rise by £630 to £8,105. Other benefits, including job seeker allowance and maternity benefits are to rise by 5.2 per cent in line with inflation.
Opposition MPs and unions, however, have criticised the freezing of child benefits and changes which will see parents working a minimum of 24 hours per week – rather than the current 16 hours – in order to qualify for working tax credits.
The Trade Union Congress has said the changes to tax credits will outweigh any benefits from the personal allowance being raised, with some families loosing up to 20 times more than they will gain as a result.
TUC General Secretary Brendan Barber said: “Millions of people will be getting a small boost from the personal allowance increase this Friday, but working families are likely to have lost far more from cuts to tax credits. With unemployment at a 17-year high and full-time jobs being replaced with part-time ones, parents struggling to find 24 hours of work between them could lose thousands of pounds.
“Complicated changes to child benefit for higher rate taxpayers will provide further financial headaches for many parents this year.
“From tax credits to cuts in vital public services, families are bearing the brunt of the government’s austerity measures. This approach is self-defeating as providing greater support towards the cost of raising children helps their development and boosts the economy, as parents tend to spend nearly every penny they earn.”
Other key changes include:
The child element of child tax credits is to rise by £135 while couple and lone-parent elements of working tax credit are being frozen.
The personal allowance for 65-to 74-year-olds is to rise from £9,940 to £10,500.
The lifetime allowance for pensions will reduce from £1.8 million to £1.5 million