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Students likely to lose from 2012 Budget

22 Mar 2012

Students likely to lose from 2012 Budget Students are likely to be affected by the tax rises announced in yesterday’s budget, while most will not earn enough to benefit from the tax cuts. The Chancellor announced a raft of measures in his hour long speech, some of which will have an impact on students.

In a year when the cap on tuition fees rises to £9,000 a year, youth unemployment is continuing to rise, and the minimum wage development rate is frozen at £4.98 an hour, many students were hoping for a budget brimming with measures that would cut their costs of living.

However, a number of tax rises were announced that will push up costs for many students, including an increase in duty on alcohol of 2% above inflation (equivalent to about 5p on a pint of beer), an increase in tobacco duty of 5% above inflation (adding 37p to a packet of cigarettes), a 3p per litre increase in fuel duty, and VAT to be applied to sports nutrition products and hot takeaway food and drink products.

The personal tax allowance will rise from £7,475 to £8,105 on April 6th, but the majority of students do not earn £8,105 a year, so will not benefit from this tax cut. Even students who have part time jobs during term time and full time holiday jobs are unlikely to earn more than £7,474 unless they are paid significantly more than the £4.98 an hour minimum wage development rate (applicable to 18 – 20 year olds).

The Chancellor also announced a cut in corporation tax and the top rate of income tax in an effort to boost job creation, so students without a part time job or temporary job will have to hope that those measures work.

It isn’t all doom and gloom for students though! There are plenty of student jobs available, many of which pay more than the £6 per hour realistically needed to reach the increased income tax threshold whilst studying full time. There are also loads of student deals on offer which can easily offset the increases in duty announced in yesterday’s budget. So if you are a hardworking, deal savvy student, you don’t have to be a 2012 budget loser.

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