BUDGET 1999: HOW THE BUDGET AFFECTS YOUR POCKET

The Budget and You

DUAL INCOME FAMILY

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Income 50,000 50,000 0

Child benefit 1,043 1,043 0

Income tax * (11,981) (11,845) 136

National insurance (3,690) (3,614) 76

Value of MCA 285 197 (88)

Tax relief on pounds 3,500 pension 1,400 1,400 0

Mortgage repayments (5,429) (5,429) 0

Domestic fuel bills (840) (840) 0

Net income 30,788 30,912 124

Duty: Wine (780) (780) 0

Spirits (180) (180) 0

GAIN/(LOSS)

Car benefit 4,667 5,000

Fuel benefit 1,280 1,540

Assumptions:

Dual income family + 2 children. He earns pounds 33,000, she earns pounds 17,000. Company car costing pounds 20,000; 2,000cc; 5,000 business miles pa; fuel provided by employer. Mortgage pounds 80,000; interest rate 7.05%; interest only. Domestic fuel pounds 800 + VAT. Drinks: wine 3 bottles/wk at pounds 5 per bottle; spirits 1 bottle per month at pounds 15 per bottle. * Effect of MCA and pension relief not included in income tax figure. After mortgage, pension and fuel bills.

YOUNG PROFESSIONAL COUPLE

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Income 100,000 100,000 0

Income tax* (31,551) (31,238) 313

National insurance (4,512) (4,514) (2)

Tax relief on pounds 3,000 pensions each 2,400 2,400 0

Mortgage repayments (9,306) (9,306) 0

Domestic fuel bills (840) (840) 0

Net income 56,191 56,502 311

Duty: Wine (1,820) (1,820) 0

Spirits (180) (180) 0

Cigarettes (1,238) (1,301) (64)

Annualised stamp duty cost (3,000) (3,750) (750)

GAIN/(LOSS)

Car benefit 4,667 5,000

Fuel benefit 1,280 1,540

Assumptions:

Dual income family. No children.

She earns pounds 60,000; he earns pounds 45,000. Company car costing pounds 20,000; 2,000cc; 5,000 business miles pa; fuel provided by employer. Mortgage pounds 135,000;

interest rate 7.05%; interest only. Stamp duty halved as intend to move house every two years to pounds 300,000 property. Domestic fuel pounds 800 + VAT.

Drinks: wine 5 bottles/wk at pounds 7 per bottle; spirits 1 bottle per month at pounds 15 per bottle. She smokes 7 packets of cigarettes a week at pounds 3.40..

*Effect of pension relief not included in income tax figure.

After mortgage, pension and fuel bills.

SINGLE PERSON

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Income 25,000 25,000 0

Income tax (4,656) (4,558) 98

National insurance (2,234) (2,157) 77

Rent (5,400) (5,400) 0

Domestic fuel bills (420) (420) 0

Net income 12,290 12,465 175

Duty: Wine (415) (415) 0

Petrol (984) (1,014) (30)

Cigarettes (1,238) (1,238) (64)

GAIN/(LOSS)

Assumptions:

Single woman earning pounds 25,000 pa.

Domestic fuel: pounds 400+VAT. Her own car: 10,000 miles pa at 30mpg; unleaded petrol at 65p/litre. Drinks 2 bottles of wine a week at pounds 3.99 a bottle and smokes 7 packets a week at pounds 3.40.

After rent and fuel bills.

PENSIONER COUPLE

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Income 30,900 30,900 0

Income tax* (4,694) (4,405) 289

Value of MCA 285 197 (88)

Domestic fuel bills (630) (630) 0

Net income 25,861 26,062 201

Duty: Spirits (780) (780) 0

GAIN/(LOSS)

Assumptions:

Recently retired pensioner couple, both aged between 65 and 74.

Domestic fuel pounds 600 + VAT. Non-smokers but drink 1 bottle of scotch per week at pounds 15 per bottle. He is on pounds 19,500 occupational pension + pounds 3,500 SRP.

She is on pounds 6,000 occupational pension + pounds 1,900 SRP. Total pounds 30,107.

*Effect of MCA not included in income tax figure.

After mortgage, pension and fuel bills.

RECENT GRADUATE

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Income 17,500 17,500 0

Income tax (2,931) (2,893) 98

National insurance (1,484) (1,407) 77

Rent (5,400) (5,400) 0

Domestic fuel bills (420) (420) 0

Net income 7,265 7,440 175

Duty: Beer (1,144) (1,144) 0

Cigarettes (1,238) (1,238) (64)

GAIN/(LOSS)

Assumptions:

Recent graduate earns pounds 17,500 pa.

Rent pounds 450 p.m. Domestic fuel: pounds 400+VAT. Drinks 10 pints beer/wk at pounds 2.20 and smokes 7 packets a week at pounds 3.40.

After rent and fuel bills.

LOW INCOME FAMILY

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Income 7,280 7,280 0

Family credit 4,378 4,378 0

Child benefit 1,510 1,510 0

Income tax* (617) (482) 135

National insurance (462) (385) 77

Value of MCA 285 197 (88)

Rent (1,560) (1,560) 0

Domestic fuel bills (683) (683) 0

Net income 10,132 10,255 124

Duty: Beer (343) (343) 0

Cigarettes (884) (930) (45)

GAIN/(LOSS)

Assumptions:

WFTC changes not included. 2-parent family with 3 children earning pounds 140 per week. Domestic fuel pounds 650 + VAT. Drinks: 3 pints beer p/wk at pounds 2.20 per pint.

*Effect of MCA not included in income tax figure.

After rent and fuel bills.

ENTREPRENEUR

1998-99 1999-00 Change

pounds pa pounds pa pounds pa

Salary 150,000 150,000 0 Income tax (59,009) (59,211) (202)

National insurance (2,256) (2,257) (1)

Share dividends (after tax) 75,000 75,000 0

Tax relief on pounds 15,000 pension 6,000 6,000 0

Tax relief from pounds 10,000 EIS invtmnt 2,000 2,000 0

Tax relief from pounds 10,000 VCT invtmnt 2,000 2,000 0

Mortgage repayments (31,514) (31,514) 0

Domestic fuel bills (945) (945) 0

Net income 141,276 141,073 (203)

Duty: Wine (728) (728) 0

Spirits (780) (780) 0

GAIN/(LOSS)

Car benefit 11,667 12,500

Fuel benefit 1,890 2,270

Assumptions:

Entrpreneur taking pounds 150,000 salary and pounds 100,000 dividends.

Company car costing pounds 50,000; 4,000cc; 5,000 business miles pa; fuel provided by company Domestic fuel pounds 900 + VAT. Mortgage pounds 450,000; interest rate 7.05%; interest only. Drinks: wine 2 bottles/wk at pounds 7 per bottle; spirits 1 bottle per week at pounds 15 per bottle. Relief on VCT and EIS investments given at 20%.

After mortgage, pension and fuel bills.

pounds 1998-99 1999-00