Budget 2014 – Tax Credits

The major changes to the tax credits system have been announced in previous budgets, but below is a reminder of the changes that will take effect as from April 2014:

  • The income increase disregard will remain at £5,000
  • The income decrease disregard will remain at £2,500
  • There will be small increases in the following elements of tax credits:
    • Basic element  – increase of £20
    • Couple/lone parent element  – increase of £20
    • 30 hour element   – increase of £10
    • Disabled worker element – increase of £80
    • Severe disability element  – increase of £35
    • Child element  – increase of £30
    • Disabled child element  – increase of £85
    • Severely disabled child element  –   increase of £35
  • If you have a child aged 16-19 included in your child tax credits claim, each year by 31 August you will need to inform the tax credits office if they remain in full time non advanced education (FTNAE), whereas previously they automatically continued to qualify. Failure to notify will result in your child being removed from your claim.

 

Universal Credits

It was initially planned that as from April 2014, there would be no new claims for tax credits (and some other benefits including Housing Benefit, Employment & Support Allowance), and that all new claims would be for Universal Credit (UC).

Due to various “glitches”, including government computer problems, the national roll out of UC expected in April 2014 has been delayed, and as yet no revised date has been provided. Instead, Iain Duncan Smith has since said that there will be “significant volumes” of new claimants moving onto UC throughout 2014.

From April 2014 couples and families will be able to claim UC in the 10 “pathfinder” areas that were previously only taking on new UC claims for certain single people. The pathfinder sites are Warrington, Oldham, Ashton-under-Lyne, Wigan, Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton.

By the end of 2014, UC will start to be rolled out across more of the North West of England.

One positive bit of news however is that the Government have announced that under UC, up to 85% of childcare costs can be claimed, whereas previously the limit was 70%.

Dodd & Co will continue to update the news section of their website when significant announcements are made.

 

Childcare

It was announced in Budget 2013 that from autumn 2015 tax free childcare will be introduced as a replacement for employer supported childcare. The good news is that ahead of the budget speech, the Coalition government announced the limit for help will be increased from £1,200 to £2,000 per annum per child.

The scheme will be introduced from autumn 2015 and will be available for all children under 12 (the government had previously proposed it would be available to under 5’s initially, and would take 7 years to be available to under 12’s). Disabled children up to the age of 16 will also be eligible.

  • It is available to households where both parents earn less than £150,000 pa (i.e. total household income of £300,000)
  • It is suggested the scheme will operate via an online Government system, and for every 80p the parent contributes, an additional 20p will be added by the Government (up to the limit of £2,000 per child per annum)
  • The scheme is available to both the employed and self employed
  • Both parents must work and earn at least an average of £50 per week each
  • Parents are not in receipt of Tax Credits or Universal Credits
  • You have the flexibility to contribute to the account when you wish, thus potentially building up a balance to use when childcare is needed more than usual (e.g. summer holidays)
  • Anyone can pay into the account on your behalf, for example grandparents or other family members

 

 

 

<Nov 2017>
MTWTFSS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Nov 20

No events today

Cloud accounting provides us with a real time view of our business accounts at anytime and from anywhere. Sales and purchase invoices are easy to input in a user friendly way, and the bank account link allows us to pull across electronic bank account statements automatically. Reporting in cloud is so easy and at a glance the dashboard shows account balances, invoices owed to you and bills needed to pay, straight away highlighting any action required. You can quickly see the profit and loss account, balance sheet and all other reports, and can drill down into individual transactions. Our main server has also moved to the cloud, which has revolutionised the way we manage our business. As a small business with a couple of employees it allows us to spend more time tending to clients and less time managing accounts and systems, allowing us to work at home or on customer sites without having to go back to the office. The savings and benefits are SO DRAMATIC and INSTANT in terms of time required for data input.  Time spent on all of this is now LESS THAN 2 HOURS PER WEEK, and this would be impossible with our old systems and procedures.  Our profitability has increased too as we can now spend more time working on projects rather then admin.  Mike Potts, Ashwood Design

 
-- Mike Potts - Ashwood Design