Find out how the budget changes will affect income tax, inheritance tax, pensions, child tax credit and working tax credit
Income tax changes
Personal allowances and income tax thresholds will move up, as announced in the 2011 budget:
• Personal allowance (amount you can earn tax free this year), up £630 to £8,105 for under-65s
• Personal allowance for 65 to 74-year-olds, up £560 to £10,500
• Personal allowance for over 75-year-olds, up £570 to £10,660
• Married couple's allowance for over 75s, up £410 to £7,705
• The limit on how much workers are taxed at the basic-rate of 20% has been reduced so that the amount you need to earn to become a high-rate taxpayer stays the same
• The basic rate limit falls by £630 to £34,370, meaning a worker aged under 65 will earn £42,475 before paying tax at 40%
• Any earnings above £150,000 will be taxed 50% this year – the 45% rate starts in April 2013
Inheritance tax changes
There will be a new rate of inheritance tax for estates that leave a large legacy to charity:
• Inheritance tax will be charged at 40% on estates over £325,000 where no legacy is made
• Inheritance tax will be charged at 36% on estates over £325,000 where at least 10% is left to charity
Benefits
A number of benefits, including the state pension and jobseeker's allowance (JSA), rise in line with inflation, as measured by the consumer prices index at September 2011 - 5.2%. This means:
• Contribution- and income-based JSA for under 25s are both up £2.80 a week to £56.25, for over-25s up £3.50 a week to £71
• Statutory maternity and paternity pay is up £6.72 a week to £135.45. The amount you must earn to qualify goes up £5 to £107 a week
• Statutory sick pay is up £4.25 a week to £85.85
But the main elements of working tax credit has been frozen for 2012/13, while child benefit is frozen for another two years until April 2014.
Pensions
The basic state pension rises by 5.2%, in line with September's CPI figure. Pensions credits, which are designed to increase pensioners' incomes to a set minimum weekly level, are not inflation-linked. There are two types of credit: guaranteed credit and savings credit, the latter designed to reward those who have saved.
• From 9 April the basic state pension, up £5.30 a week to £107.45
• The minimum level that the guaranteed pension credit will make incomes up to, goes up by 3.9%, or by £5.35 a week to £142.70 for single pensioners and by £8.18 to £217.90 a week for couples
• The maximum savings credit has been cut by £1.98 to £18.54 a week for single pensioners, and by £3.36 a week for couples, and the threshold at which people qualify for savings credits is increased by 8.4% to £111.80 for single pensioners and £178.35 for couples
Child tax credit
The limit of how much you can earn and still get Child Tax Credit is going down, from about £41,000 a year to about £26,000 if you've got one child, about £32,000 if you've got two children, and £38,000 if they have three. However, you may still qualify if you are disabled
Working tax credit
Couples with children must work at least 24 hours a week between them instead of 16 hours, and one of you must also work at least 16 hours a week. However, some couples will still be able to claim if they work just 16 hours between them if they are covered by one of the exceptions to this new rule. These are:
• If they are entitled to the WTC disability element
• Aged 60 or over
• If only one member of the couple works at least 16 hours per week and the other is incapacitated, an in-patient in hospital, in prison, in custody awaiting trial, or entitled to carer's allowance.
If you make a new claim, or have a change in your circumstance which would mean your payments should go up, the extra money you'll get will only be backdated by one month instead of three months. If your income goes down by £2,500 or less in a tax year, this won't be taken into account until the next tax year. If it goes down by more than £2,500, HMRC will re-work your tax credits but ignore the first £2,500 until the following tax year.
If you get the "50-plus element" of Working Tax Credit, this will stop. Nobody will be able to claim this after 6 April.
Later on in April:
Employment and support allowance: The government is limiting the period for which contribution-based ESA will be paid to claimants from 30 April 2012.
The change will limit the time people in the work related activity group can receive the benefit, worth up to £94.25 a week, to 365 days, remove the special contribution condition and prevent any new claims for ESA on the grounds of youth. However those whose benefit ends may still qualify for income-related ESA.