What does the chancellor’s budget mean for you?

Catherine Gannon, 50 Managing director of law firm Gannon

Having started her own business 10 years ago, she earns around £100,000, though says this is getting more difficult to achieve, and while she has a share portfolio, she doesn’t have much in the way of a pension plan. Lives with her two children aged 10 and 12, in a home she owns with a mortgage. Takes the tube to meet clients around London.

PwC’s BUDGET TEAM SAYS:

CATHERINE acknowledges that she needs to increase her pension funding so the restriction in the pension annual allowance from £50,000 to £40,000 may come as a blow.

In addition given her level of income, her regular receipts of child benefit for her two children will effectively cease from 7 January 2013.

Turning to her business, if any capital expenditure is being contemplated, the 10 fold increase in the Annual Investment Allowance from £25,000 to £250,000 will be very welcome news.

Martin Winter, 58, Partner, Taylor Wessing

Martin lives in Wandsworth with his wife in a home they own, with no mortgage. They have children aged 20 and 22, one of whom is 16th in the world at slalom waterskiing – a fuel-hungry sport – but they worry about youth unemployment. Martin runs to work, takes the tube and other public transport, and tends only to use his car at the weekend. He frequently flies on business trips. He saves through Isas, and Taylor Wessing recorded average earnings per partner of £537,000 in 2011-12.

PwC’s BUDGET TEAM SAYS:
IN the run up to retirement Martin may well be seeking to maximise his pension funding. He will need to give this attention given that from 6 April 2014 the lifetime allowance will be reduced to £1.25m from £1.5m. In addition to this the annual pension allowance will reduce from £50,000 to £40,000 from 6 April 2014. The increase in the ISA allowance will be welcome but he will gain no benefit from the personal allowance increase given his level of income. Given the fuel hungry activities of his son, Martin will be pleased with the coalition’s abandonment of the 3p increase in fuel duty which was to be implemented in January. The planned increase scheduled for April 2013 will now come in on 1 September 2013.

PwC’s BUDGET TEAM SAYS:

LAURA will be pleased with the government’s announcement of a £42m investment in the Sustainable Transport Fund for cycling infrastructure.
The increase in personal allowance from April 2013 will help her personally and so too will the confirmation that the higher rate threshold above which individuals pay income tax at 40 per cent will increase by one per cent in 2014-15 and 2015-16.

Laura Mucha, 30, solicitor-advocate at Norton Rose
Laura earns between £80,000 and £90,000, has paid off her student loan, and lives in a flat she purchased recently with a mortgage.
She cycles to work, uses trains at the weekend, and flies in a personal capacity.
She pays into her firms’ pension scheme and has no children.

Kristo Kaarmann, 32, is the co-founder of TransferWise, a peer-to-peer international money transfer business, based in Shoreditch

Kristo’s business is 20-months-old and has attracted $1.35m worth of investment. He employs eight people in the UK and a further 12 around the world, but he’s looking to grow these teams in the next year. He travels overseas at least twice month to visit TransferWise’s international offices and the firm’s US investors. Kristo owns property in Tallinn, but rents in London. He cycles to work. He takes a salary of £35,000 and doesn’t have a pension. He drinks occasionally, but doesn’t smoke.

PwC’s BUDGET TEAM SAYS:

ONCE Kristo’s business becomes profitable he will be encouraged by the government’s announcement of a reduction in the main rate of corporation tax from 22 per cent to 21 per cent from April 2014. The rate will fall from 24 per cent to 23 per cent from 1 April 2013 as announced in the 2012 Budget. Looking forward Kristo may wish to reward his staff via an employee share scheme. These can be complex and the government has responded to the Office of Tax Simplification recommendation with a package of simplifications during 2013. The higher than expected personal allowance reduction from 5 April 2013 will help Kristo.

Charles Bushby, 26 Management Consultant
at a major accounting firm

After two years in performance improvement, Charles Bushby earns around £30,000. He rents in west London, though has considered buying a flat. Charles 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. He does not smoke and has no children.

PwC’s BUDGET TEAM SAYS:

CHARLES will be pleased with the unexpected further increase in the personal allowance from 6 April 2013; increasing the allowance noticed in the 2012 Budget from £9,205 to £9,440.

With Charles seeking to make his first step on the property ladder, he may well be helped by the FirstBuy scheme equity loan scheme which aims to help first time buyers in England.

Charles’ commute will hopefully be improved by the government’s commitment to provide guarantees to allow the Mayor of London to borrow £1bn for the Northern Line extension to Battersea.

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