How will the new Tory government affect your wallet?
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As David Cameron finalised his Cabinet reshuffle, the Chancellor, George Osborne, was preparing to push ahead with his austerity plans as outlined in his March budget. However, the full effects of the proposed £12bn welfare cuts won’t be presented to parliament until the Queen’s Speech on 27 May so until they’re announced we’ve taken a look at how the pre-election manifesto promises might affect your wallet.
During the period of the next parliament the tax-free personal allowance will be raised so that everyone who earns less than £12,500 will not pay income tax, while the threshold for the 40p tax rate will increase to £50,000 a year.
A new law will be passed that would mean all those working 30 hours a week and earning the minimum wage will not pay income tax on earnings.
The Jobseeker’s Allowance benefit will be replaced for those aged 18-21 and replaced with a Youth Allowance that will be time-limited to six months, after which young people will have to take an apprenticeship, a traineeship or do daily community work for their benefits.
18-21 year-olds on Jobseeker’s Allowance will also no longer have an automatic entitlement to claim Housing Benefit in order to leave home.
The benefit cap will be lowered from £26,000 to £23,000 (with exemptions for those receiving Disability Living Allowance or the Personal Independence Payment) taking it below the average wage.
The controversial ‘bedroom tax’ (officially called under occupancy tax) will remain so that people of a working age in social housing who have a spare bedroom will have their housing benefit claims reduced by £40 to £80 a month.
The state pension will continue to increase every year by the higher rate of inflation, average earnings or a minimum of 2.5%. Pensioner benefits, such as free bus passes, prescriptions and winter fuel payments, will also be protected.
In 2016 the government will bring in a new single-tier pension of at least £151.20 a week.
The amount of free hours of childcare for working parents of three and four-year-olds will double from 15 hours to 30 hours a week during term-time. From 2017, parents will benefit from up to £5,000 worth of free childcare a year in a policy designed to help parents work.
The government will also fund 15 hours a week of free childcare for all disadvantaged two-year-olds, worth £2,500 a year per child.
Other pre-election promises include more affordable homes to be built, including 200,000 starter homes for first-time buyers under the age of 40; an extension to the Help to Buy Equity Loan scheme to 2020 to help more people onto and up the housing ladder; the introduction of a new Help to Buy ISA to support people saving for a deposit and the chance to give more people the opportunity to own their home by extending the Right to Buy to tenants of Housing Associations.
What do you think?
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