Friday 24 November 2017

Five reasons to smile about your finances now you've rung in 2016

Here are five ways your finances are changing for the better this month.
Here are five ways your finances are changing for the better this month.
Louise McBride

Louise McBride

As Budget Day is almost three months old, many of us have forgotten the changes set to hit our pocket this month. Not to mention some of the price cuts announced towards the end of the year.

Here are five ways your finances are changing for the better this month.

Pay packets: €33 a month more

Many workers will take home a few hundred euro more in pay this year - thanks to the cuts in the universal social charge (USC) announced in Budget 2016. Those cuts kicked in at the start of this month.

A single person on €36,000 - about the average wage - will be about €392 a year better off after tax under Budget 2016 than he was in 2015. A married couple earning €55,000, where only one partner is working, will be about €677 a year - or €56 a month - better off after tax.

The cuts to the USC are of most benefit to those earning up to €70,044. The USC rate was cut from 1.5pc to 1pc on income up to €12,012. The next USC rate - that of 3.5pc, was cut to 3pc and it applies to earnings of between €12,012 and €18,668. The 7pc USC rate has fallen to 5.5pc - and it applies to income of between €18,668 and €70,044. The higher USC rates of 8pc (on income above €70,044) and 11pc (on income above €100,000) were not cut, however.

Electricity bills: About €2 a month cheaper

More than 300,000 households will see their electricity bills get about €2 cheaper a month from tomorrow, when a 2pc price cut from SSE Airtricity kicks in.

The price cut, which applies to the company's unit rates and standing charges, will save a typical customer about €23 a year. That's not a huge amount of savings - but it's a step in the right direction. It also follows an earlier 2pc cut in electricity prices by SSE Airtricity last April. Together, both price cuts will save a typical electricity customer about €50 a year. About 340,000 householders have their electricity with SSE Airtricity.

The more than 130,000 households who have their gas with Electric Ireland saw the rate the pay for a unit of gas chopped by 2.5pc earlier this month.

This reduction, which will save a typical gas customer about €20 a year, followed a similar price cut last April. Together, both price cuts will save a typical gas customer about €40 a year. Electric Ireland also cut its electricity prices last November.

More energy price cuts could be on the cards this year if the record low oil prices continue. Flogas announced last week that it will be cutting its gas prices next month.

Pensioners: €13 a month richer

Pensioners have been getting another €3 a week from their State pension since the start of the year. The State contributory pension is now €233.30 a week if you're between 66 and 80 or €243.30 a week if you're over 80.

Fathers-to-be: €460 to look forward to

Should you find out this month that your other half is pregnant, you'll be in line for two weeks of State-paid paternity leave from September. This benefit is worth €460 to fathers - as long as your child is not born before September.

Child benefit: €5 a month extra

A family with three young children will be €15 a month - or €180 a year- better off from now as the €5 increase in child benefit per child per month has kicked in.

Furthermore, stay-at-home parents who are eager to return to the workplace could find it easier to do so this year - because of the extra year of free pre-school announced under Budget 2016.

That extra year means that parents are now entitled to two years of free preschool under the Early Childhood Care and Education (ECCE) scheme.

The ECCE scheme only covers three hours of free pre-school for 38 weeks of the year - however, it can make childcare costs more manageable for parents.

But it's not all wine and roses...

There are still a few things which will take money out of your pocket this year.

You could be paying as much as 15pc more for your property tax this year than last if your local authority is one of the five which increased its rate this year.

Tenants are also losing out - and it's not just down to high rents.

In Budget 2011, the then government started to phase out rent relief - a tax break which can be claimed by taxpayers who rent private accommodation. Since then, only those who have been renting continuously on or before December 7, 2010 can claim rent relief - and the amount of relief which can be claimed back has also been slashed.

Last year, the tax break was worth up to €120 for a single person under 55 - compared to €320 in 2011. This year, the tax break has been cut again and is only worth up to €80 for the same individual, taking about €40 in tax relief out of his pocket this year.

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