Will I be better or worse off this year?

George Osborne before this year's Budget
George Osborne before this year's Budget

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Now the dust has settled on last month’s budget it’s worth taking a look at how it will actually affect your finances.

Controversial though the changes might have been, the truth is the government has made relatively small alterations to a whole raft of tax allowances and benefits, rather than overhauling the whole system.

But this can make it harder to know if you’re going to be left better or worse off – because while you could end up paying more or getting less in one area, this might be balanced somewhere else.

Many of the changes came in on Good Friday, while others are scheduled to be introduced later this month.

They range from an alteration to the first chunk of income that is tax-free – known as the personal allowance – to a cut in child benefit for those who earn more which will come into force next year.

Some have been welcomed, but others have proved predictably controversial.

‘Millions of people will be getting a small boost from the personal allowance increase, but working families are likely to have lost far more from cuts to tax credits,’ said Brendan Barber, general secretary of the TUC.

So Streetwise has taken a look at this month and last month’s changes in detail.

· Tax changes

The most welcome difference for many people is an increase in the personal allowance – the amount you earn before paying income tax – by £630 up to £8,105. This will then rise again to £9,205 from April 2013.

But there was a sting in the tail for those over 65. Although the age-related allowance will go up to £9,940, or £10,660 for those over 75, it will be frozen from April 2013 for existing claimants and abolished altogether for new claimants.

· Cost of living

The big change that hit many people in their pockets was a 37p increase in the cost of a 20-pack of cigarettes from March 21.

Other changes due to come in were left unchanged by the budget, such as the increase in the cost of fuel by 3p a litre from August and a rise in the cost of alcohol by two per cent above inflation from March 26.

This has added around 5p to the price of an average pint and means a bottle of wine will cost around £5.

· Benefits

A number of benefits, including the state pension and jobseeker’s allowance (JSA), have risen in line with inflation, which currently stands at 5.2 per cent. This means JSA for under-25s is up £2.80 a week to £56.25, and for over-25s it’s up £3.50 a week to £71.

Maternity and paternity pay is up £6.72 a week to £135.45 and the amount you must earn to qualify goes up £5 to £107 a week. Statutory sick pay is also up £4.25 a week to £85.85.

· Tax Credits

The changes to Working Tax Credit and Child Tax Credit are many and varied.

One of the biggest changes is that couples with children will have to work 24 hours a week between them, not 16, in order to qualify for Working Tax Credit.

The limit of how much you can earn and still get Child Tax Credit has also gone down, from about £41,000 a year to about £26,000 if you’ve got one child, about £32,000 if you’ve got two children, and £38,000 if you have three. However, you may still qualify if you are disabled

For a proper idea of how the changes will affect you use the tax credit calculation at direct.gov.co.uk.

· Pensions

There is better news for older people in that the basic state pension will go up by £5.30 to £107.45 a week for a single person.

However the state pension age will soon be tied to an automatic review to make sure it keeps on rising if people keep on living even longer. Details of how this will work will be published this summer.

· Help with figuring out your own budget, including ways to cut costs, can be found at moneyadviceservice.org.uk