A Guide to the VAT Increase

An increase in the standard rate of VAT from 17.5 per cent to 20 per cent, was announced by George Osborne in the 2010 Emergency Budget.

The VAT rise will come into effect on 4th January 2011, as the coalition try to tackle the budget deficit. The increase is hoped to reduce the deficit by £13 billion.

George Osborne has been criticised by the Labour Party for making the increase.

The Chancellor defended the decision to raise VAT and claimed that it will boost employment. 

The Facts:

Effects on Businesses

-The VAT increase affects any VAT registered business that sells or purchases goods or services that are subject to the standard VAT rate

-You should charge the increased rate of VAT (20%) on any sales of standard rated goods or services that you make on or after the 4th January 2011

-You should update your paperwork and your invoices

-You should update your prices

-Returned goods that a customer purchased prior to the increase in VAT should be credited at the previous rate of 17.5%

VAT is not applicable to:

-Food, children's clothing, books, magazines and newspapers

For a detailed guide to the VAT increase visit: http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-guidance.pdf

Student Fee Increase and you

How will the student fee increase affect you? Post your comments and stories below.

Student University Fees Increase

From 2012, students face tuition fees of up to £9,000.

The current fee of £3,290 per year, will rise as the government attempt to transfer the costs of university, from the state to the student. 

This means that many universities will rely almost entirely on the students fees for their income.

Despite government disputes, the plans to increase university fees in England were approved.

Thousands of students went to protest against the fee increase at Westminster. 

Benefit cuts and you

How have the cuts affected you? Post your comments and stories here.

UK Action Against the Cuts

The Coalition's cuts have sparked fury across the country. View the map below for protests against the cuts taking place in the UK.

CommunityWalk Map - Action Against the Cuts

or click the link here to view the map on a larger scale.

How will the benefit cuts hit you?

Child Tax Credit Q&A

What is Child Tax Credit?

Child tax credit is a tax credit based on the number of dependent children in a family. Child tax credit is paid direct to the person who is mainly responsible for at least one child or qualifying young person.

There are various different elements of child tax credits. These include the family element, the baby element, the child element, the young person element and the disability element. All elements are paid at different rates.

Who can get child tax credit?

Currently, parents or guardians can claim child tax credits if they earn up to £58,000 a year and £66,000, if the child is under the age of one.

You can claim child tax credit if:

-your child lives with you (up until the 31st August after their 16th Birthday)

-your child is over 16 and is in full-time, non-advanced education or approved training

Note:

-You cannot claim child tax credit when your child reaches the age of 20.

-Only one person can claim child tax credit for your child.

How much can you claim?

The lower your income, the more a parent or guardian can claim. Payments are potentially worth up to £2,850 a year for just one child.

How is child tax credit paid?

Payments will usually be made into a bank or building society account. You can choose whether to receive payments weekly or monthly.

How can you claim child tax credit?

You can get a claim pack sent to you from HM Revenue and Customs or you can:

-Phone the HMRC helpline on 0845 300 3900

-visit any HMRC Enquiry Centre

You should be able to provide:

-Your income details (and those of your partner if you have one) and the WTC1 8 form.

-Your National Insurance Number (and your partners)

What changes have been made?

From April 2011, Child Tax Credits will be reduced for families with a household income of more than £40,000 and families who have a child under the age of one will no longer receive the current additional £545 a year.

In 2011-2012 the amount given to each child in the child element of CTC will increase by £150 above consumer price indexation and will increase again in 2012-2013 by £60.

Go to: http://www.hmrc.gov.uk/leaflets/wtc2.pdf to download the full details of entitlement.

Child Benefit Cuts Q&A

What is Child Benefit?

Child benefit is a social security payment disbursed to the parents or guardians of children. The payment can be claimed by anyone who qualifies, no matter what their financial circumstances are. It is usually paid every month, but is sometimes paid on a weekly basis. There are separate rates payable to each child.

Who can claim child benefit?

If you are responsible for a child, even if you are not their parent, you can usually claim child benefit.

Currently, you can claim child benefit if:

-Your child is under 16 (If your child is over 16, you cannot claim child benefit unless they are in education or training that qualifies for child benefit)

-Your child does not live with you, but you pay towards their upkeep, what you pay is at least the same amount received in child benefit and as long as the person your child lives with in not claiming child benefit for them.

Note:

-Only one person can claim child benefit for your child

-You cannot claim child benefit once your child reaches the age of 20.

How much child benefit will you receive?

There are separate rates payable to each child. For the eldest child or only child, you will receive £20.30 a week and £13.40 a week for each of your other children. 

How is child benefit paid?

Child benefit is usually paid monthly, but if you receive Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Pension Credit or are a single parent, you can receive payment weekly.

Child benefit can be paid into any bank, building society, or National Savings and Investments (NS&I) that accepts Direct Payment.

How can you claim child benefit?

In order to claim child benefits, you must fill in a child benefit claim form and send it to the Child Benefit Office with your child's birth or adoption certificate.

You are unable to claim over the phone or on the Internet. However, forms are available to fill in online, but must then be printed off and sent to the Child Benefit Office. 

What changes have been made?

As laid out by George Osborne, in the Emergency Budget in June 2010, higher rate tax payers earning £44,000 a year or more will no longer receive child benefit from 2013. Families with two basic rate tax payers will still be able to claim child benefit, even though their combined income could be over £44,000 a year. A family with only one high rate tax payer will still lose their child benefit. 

If a higher rate tax payer does claim child benefit, it will be claimed back through the tax system.

Who will be hit by the changes?

Removing child benefit from higher rate taxpayers will hit some harder than others. Those particularly affected will be single parent families and part-time working or stay at home mothers. 

Visit http://www.hmrc.gov.uk for more information.

The benefit cuts: video