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Budget tax changes could boost working parents’ income by more than £6,000 | Personal Finance | Finance
Some working parents are set for a £6,000 income boost thanks to new National Insurance and Child Benefit changes that’ll take effect in April.
Middle-income families have been described by some as the “biggest Budget winners” due to the two tax changes announced by Chancellor Jeremy Hunt on Wednesday.
Laura Suter, director of personal finance at investment platform AJ Bell, said: “A couple with two (or more) children where each partner earns £60,000 a year are the biggest winners from Hunt’s handouts – as they get the maximum National Insurance boost and can now claim child benefit in full.”
National Insurance will reduce a further 2p to eight percent on April 6. Meanwhile, the widely criticised High Income Child Benefit Charge threshold will rise from £50,000 to £60,000.
For a couple with two children, the combined impact of National Insurance cuts and changes to Child Benefit totals an extra £5,229 a year, while a couple with three children get an extra £6,110 a year from next month.
That includes the National Insurance cuts announced at the Autumn Statement and Wednesday’s Budget.
Ms Suter said: “Clearly these figures can’t be taken in isolation: they come with a backdrop of frozen income tax bands, a huge increase in personal taxation and rising prices that outpace much of the handouts made at the Budget.
“Parents only have to glance at their childcare bills to see how much of these gains will be eaten up by that one rising cost alone.
“But regardless, the boost to working parents’ household budgets is significant and far better than if no changes were made at the Budget.”
Additionally, Ms Suter noted that many working parents will benefit from the Government’s extended ‘free’ hours of childcare being rolled out from next month.
She explained: “It means parents of two-year-olds will be able to access 15 funded hours of childcare, which will extend to parents of nine-month-olds from September and is then upped to 30 hours next year.
“The actual financial implication of this will depend on how much your childcare costs and what extra fees your nursery charges on top of the funded hours, but it’s a potential saving of thousands for parents across a year.”
How do the changes work?
The cut to National Insurance for employed people means those earning more than the higher-rate threshold of £50,270 benefit from the “biggest” saving, Ms Suter said.
She explained: “They will see their National Insurance bill drop by £754 a year from April. But if we combine that with the savings made as a result of the changes in the Autumn Statement, that increases to a saving of £1,508 per person.”
For a couple where both partners earn £50,270 or more, this figure is doubled, resulting in a £3,016 boost for the household.
At the same time, changes to Child Benefit mean a parent earning £60,000 will be entitled to the full amount from next month, where currently they get nothing.
Ms Suter said: “The change to the High Income Charge means that Child Benefit will be tapered out once someone earns more than £60,000, rather than the current £50,000 threshold.”
From April, Child Benefit will be paid at £25.60 a week for the eldest child and £16.95 a week for any subsequent children.
Ms Suter said: “If someone was previously getting no child benefit and now gets the full whack it equates to an extra £2,212.60 a year for two children, or £3,094 a year for parents with three children.”
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As we look ahead to 2024, many homeowners and prospective buyers are wondering what to expect when it comes to mortgage rates. The landscape of the housing market is constantly changing, so it’s important to stay informed about trends and predictions. In this blog post, we will discuss some factors that could impact mortgage rates in 2024 and what homeowners and buyers can expect.
One factor that could impact mortgage rates in 2024 is the overall state of the economy. If the economy is strong and growing, we may see higher mortgage rates as the Federal Reserve looks to combat inflation. On the other hand, if the economy is stagnant or in a recession, we may see lower mortgage rates as the Fed looks to stimulate growth. It’s important to keep an eye on economic indicators such as GDP growth, unemployment rates, and inflation to get a sense of where mortgage rates may be heading.
Another factor that could impact mortgage rates in 2024 is Federal Reserve policy. The Fed plays a key role in setting interest rates, and their decisions can have a ripple effect on mortgage rates. If the Fed decides to raise interest rates in response to inflation, we may see an increase in mortgage rates. Conversely, if the Fed decides to lower interest rates to stimulate growth, we may see a decrease in mortgage rates. Keeping up with the latest news and announcements from the Fed can give homeowners and buyers a sense of where mortgage rates may be heading.
In terms of specific cities and local mortgage companies, it’s important to note that mortgage rates can vary depending on location and lender. For example, in a city like New York City, where real estate prices are high, mortgage rates may be higher compared to a city like Indianapolis, where real estate prices are lower. Additionally, local mortgage companies may offer competitive rates and terms compared to national lenders. For example, in New York City, local lenders like Quontic Bank and CrossCountry Mortgage may offer specialized products and services tailored to the needs of local buyers.
It’s important for homeowners and buyers to shop around and compare rates from multiple lenders to ensure they are getting the best deal. Websites like Bankrate and LendingTree can be helpful resources for comparing rates and terms from multiple lenders. Homeowners and buyers should also consider working with a mortgage broker who can help them navigate the lending process and find the best mortgage product for their needs.
In conclusion, predicting mortgage rates in 2024 is not an exact science, but there are several factors that could impact rates. By staying informed about economic indicators, Federal Reserve policy, and local market trends, homeowners and buyers can make informed decisions about their mortgage. Shopping around and comparing rates from multiple lenders is key to ensuring you are getting the best deal on your mortgage. Whether you’re looking to refinance your existing mortgage or buy a new home, it’s important to stay informed and be proactive in managing your mortgage.
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