WHAT DOES THE CHANCELLOR’S BUDGET MEAN FOR YOU?

 
Tim Wallace
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CATHERINE GANNON, 50,MANAGING DIRECTOR OF LAW FIRM GANNON
Catherine lives with her children, aged nine and 11, in a home she owns with a mortgage. She set up her firm nine years ago and worries about red tape and taxes. When travelling to meet clients, she uses the tube. She earns over £100,000, and has a share portfolio, though not much by way of pension plans.

PwC’s BUDGET TEAM SAYS:
Although the pre-Budget speculation about an increase in the income levels where there will be a loss of child benefit did come to fruition, the limit is now £60,000 which will not help Catherine. As a result of this Catherine's income will reduce by around £1,750 per annum from January 2013. On the flip side the reduction of the 50 per cent income tax rate to 45 per cent from April 2013 will be welcome. The Budget did contain details of a reduction of red tape with the coalition scrapping or improving 84 per cent of health and safety regulations which should lighten the administrative burden.

MARTIN WINTER, 58, PARTNER, TAYLOR WESSING
Martin Winter lives in Wandsworth with his wife, in a home that they own with no mortgage. They have two children, aged 20 and 22 and are concerned about youth unemployment. Martin runs to work but occasionally uses public transport. He uses his car only at the weekends, and frequently flies on business trips. He saves, with ISAs, and the company recorded average earnings per equity partner of £537,000 in 2011-12.

PwC’s BUDGET TEAM SAYS:
Hope is on the horizon for Martin’s finances with the chancellor’s announcement that the income tax additional rate of 50 per cent is to be reduced to 45 per cent from April 2013. Martin’s healthy approach to life, by running to work and only using his car at weekends, means that he is partially insulated from the 3p per litre increase in fuel duty. The increase of two per cent in stamp duty land tax for property purchases over £2m may well effect the future saleability of Martin's Wandsworth "des res". Given Martin’s high marginal tax rate it makes particular sense for him to save via an ISA. From April the annual ISA allowance will rise to £11,280.

JONNY SAYLE, 27, FOUNDER OF SPIRELIFE, A FITNESS CONCIERGE FIRM FOR CITY WORKERS
Jonny employs three permanent staff and seven freelancers at his business, which has a turnover of around £85,000. He takes home a salary of £40,000 and is looking to move abroad, as he thinks the business could run itself in about six months. He already travels overseas every couple of months, mainly for business. Jonny lives in Barnes, where he rents, and travels around London by moped. He doesn’t have a pension plan or any significant investments. Jonny drinks occasionally but does not smoke.

PwC’s BUDGET TEAM SAYS:
The increase in the personal allowance will be welcomed and especially the reassertion of the coalition’s aim of bringing this up to £10,000 by April 2015. The chancellor mentioned that the reduction in corporation tax will not benefit banks as there will be a corresponding rise in the bank levy. Unwelcome news for many of Jonny's clients. The increase in fuel duty will affect him but his fuel efficient moped will reduce the overall effect. With his plans to leave the UK, Jonny should be mindful that a new statutory residency test will be introduced from April 2013 which will aim to bring clarity as to whether an individual is UK resident for tax purposes.

LAURA MUCHA, 29, SOLICITOR-ADVOCATE AT NORTON ROSE
Laura earns between £75,000 and £85,000 and makes the final payment on her student loan this month. However she remains sensitive to interest rates as she has recently bought a flat. She cycles to work, uses trains at the weekend and flies frequently in a personal capacity. She invests in the company’s pension scheme, has no children, and is a social drinker.

PwC’s BUDGET TEAM SAYS:
The announcements with regard to the personal allowance increase will be welcomed but Laura should be aware that any future pay rises may well result in her losing her personal allowance altogether. Individuals lose this on a sliding scale for income levels over £100,000 with entitlement in the 2012-13 tax year going completely when income reaches £116,210. Laura may well have a safer ride to work with the Budget announcing a £15m grant to Transport for London which will be used for improving provision for cyclists at junctions in the capital. The previously announced increases in air passenger duty to be introduced from 1 April will go ahead and will increase the cost of Laura’s foreign excursions

CHARLES BUSHBY, 25, MANAGEMENT CONSULTANT AT A MAJOR ACCOUNTING FIRM
After a year in performance management, Charles earns around £30,000. He rents in west London and commutes using public transport. He saves for a pension through his firm’s generous matching scheme, but still knows how to enjoy himself – he is a social drinker. Charles does not smoke.

PwC’s BUDGET TEAM SAYS:
If Charles wants to get on the property ladder soon he may wish to purchase a home under the government backed NewBuy scheme. For new build properties, offered by builders participating in the scheme, he will require just a five per cent deposit for homes with a purchase price of up to £500,000. This scheme is not restricted to first time buyers. Charles will be encouraged by the chancellor increasing the personal allowance to £9,205 from April 2013 as part of the overall aim of increasing this to £10,000 by April 2015. The increase in the alcohol duty will not be welcomed by Charles and many others. Financially he should continue to abstain from cigarettes with 37p being added to a pack of 20.