How will the Budget affect the elderly?
Yesterday,The Chancellor, George Osborne announced the Budget for 2013/14.
Here is a brief summary of how it will affect both pensioners and the very elderly.
The Government has brought forward both state pension reform and a cap on social care costs, to 2016. It has also confirmed a range of tax and benefits changes.
Changes to Taxes
The amount of income you can receive before you pay tax – for the year 2013/14 will be £9,440.
Until this Budget, there was a higher personal allowance for people aged 65 and over but last year the Chancellor said that this would no longer be available to people reaching 65 after 5 April 2013.
If you are 65 or over and have previously received a higher allowance because of your age, this will now be frozen at last years rate which was £10,500 for people aged 65 to 74 and £10,660 for those 75 and over.
In time there will be just one personal allowance for everyone.
The inheritance tax threshold is the maximum amount your estate can be worth before you need to pay inheritance tax. Your estate means everything you own, including money, property, possessions and investments.
The IHT threshold was frozen at £325,000 until 2015/16 but in February 2013 the Government announced that it plans to freeze it for a further three years.
This is being introduced as part of the plan to fund a cap on long-term care costs. In most cases, when a spouse or a civil partner dies, any unused part of their nil-rate band can be passed on to the surviving partner.
There are big changes to the welfare system, which could affect which benefits you get. Changes start to come in from April 2013.
State Pension and Pension Credit rates
As previously announced, the basic State Pension will go up by £2.70 to £110.15 in April this year.
Pension Credit, which guarantees pensioners a minimum income level, will increase to £145.40 a week for single people and £222.05 for a couple.
Single tier pension
This highly debated new single tier pension has been brought forward and will affect people reaching State Pension age from 2016.
This new pension will be worth up to £144 a week (in today’s money), and will replace the basic state pension and additional pension (also known as SERPs or a second state pension).
You will qualify for the full amount if you have 35 qualifying years of National Insurance contributions, or credits which are given for reasons such as caring or disability.
The current State Pension age for men is 65. State Pension age for women is gradually increasing from 60 to 65. From December 2018, State Pension age for both men and women will start to increase to reach 66 in October 2020.
Social Care Costs
George Osbourne has confirmed that a new cap of £72,000 on social care costs will be brought forward to 2016.
The upper threshold limit for the means test on residential care will be raised from £23,000 to £118,000 in 2016.
The duty on Fuel
The fuel duty increase planned for September has been cancelled.