How will the Emergency Budget affect me?

How will the Emergency Budget affect me?

The Chancellor announced a number of changes in the emergency budget that will have an impact on many of us.

Below are the main changes and when they will come in:

Capital gains tax - from 22 June 2010: The tax on one-off profits (eg. selling 2nd homes) for 40% taxpayers jumps to 28% from 18%.
Petrol prices - up 1p in October 2010: While the Chancellor said "no new rises", the scheduled 1p/litre rise in October is still due to happen.
VAT rise - up to 20% on 4 January 2011: Most items we buy will cost 2.1% more as VAT rises from 17.5%.
Mortgage help decreased - Oct 2010: The Support for Mortgage Interest rate of 6.08% help will drop to a new rate (expected to be 3.67%).
Child benefit frozen - until April 2014: The rate is not being cut, however, there will be no increases in the next three tax years.
Tax credits changes - 6 April 2011: Next tax year most families with £40,000+ annual incomes will get less tax credits, while some on lower incomes will see the 'child element' increased by £150 above inflation.
Personal tax allowance increase - 6 April 2011: Next year most tax payers will be able to earn £7,475 tax free (currently £6,475).
Wines, beer, spirits & tobacco - April 2011: While there are "no new rises" duty is scheduled to rise 2% above inflation next April.
Benefit rises linked to Consumer Price Index - April 2011: Currently linked to the Retail Price Index measure of inflation, it will change to the Consumer Price Index measure which tends to be lower.
State pension triple guarantee - April 2011: From then it will always rise by the HIGHER of earning, inflation or 2.5%.
Disability Living Allowance medical assessment - 2013/14: The aim is for more medicals in order to cut £1.4bn from the system.
- Non-dependant deductions to increase for income-related benefits - April 2011: other people living with you could reduce your entitlement to benefits.
- Housing Benefit for working age social rented sector customers will be restricted for those who are occupying a larger property than their household size and structure would warrant - from April 2013: Those in houses larger than they need will get their benefits reduced.
- Other changes
- Housing Benefit customers who are claiming Jobseeker’s Allowance (JSA) will only receive their full Housing Benefit award for a period of 12 months. After that period, their Housing Benefit will be reduced by 10%, and they will continue to be ineligible for the full out of work Housing Benefit rate until they have left the benefit system and been in work for a period - April 2013.
- The sum allocated by Government for Discretionary Housing Payments will increase by £10 million in April 2011 and by £40 million a year thereafter.
- Acceleration of state pension to 65 for everyone - this will also mean people won't be entitled to Pension Credit as early as they are now. No timescales have been reeased yet.
- For further information on the Emergency Budget, see Directgov or moneysavingexpert.com.