Budget 2023: what it means for people on a range of incomes

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Single

Low income

2022/23 James, 24, works 35 hours a week for a cafe and is paid the minimum wage of ?9.50 an hour, or ?332.50 a week. From his annual wage of ?15,960 he is left with ?14,761, after tax (?678) and national insurance (?521) are both deducted.

2023/24 From April the minimum wage for over-23s in rises to ?10.42 an hour. This means he now receives ?364.70 a week or ?17,506 a year. After tax and NI are deducted he is left with ?15,926 – ?1,165 more than the previous year.

Single

Average earner

2022/23 Helen earns the national average wage of ?38,000 and pays ?5,086 a year in income tax and a national insurance bill of ?3,326. Her monthly take-home pay is ?2,466 after tax, or ?29,589 a year.

2023/24 Having had a good year, her employer has awarded her ?4,000 – a 10.5% – pay rise. As a result her tax bill rises to ?5,886 while she pays ?3,532 NI. After a ?4,000 pay rise, she is actually ?2,995 a year net better off.

Cohabiting couple

Both unemployed but looking for work, two children

2022/23 Jane and Peter both were recently laid off by the pub they worked at when it suddenly closed, and are currently relying on benefits. They receive ?194 a week in universal credit, ?77/week in new-style jobseeker’s allowance each and ?36.25 child benefit. Once council tax support is added, they receive a total of ?390 a week, or ?1,690 a month, of which almost half goes on rent. They also receive cost of living payments worth ?650.

2023/24 The chancellor said last autumn that benefits would rise by 10.1%, meaning their benefits package is now worth an extra ?39 a week or ?169 a month. Their landlord has said he is raising their rent from ?800 to ?900 a month swallowing up most of the increase. Their cost of living payments rises to ?900 to help with higher energy, food and other costs.

Married couple, two children

One income of ?49,000

2022/23 The working parent, Sandra, pays ?7,286 income tax and ?4,726 in national insurance. This translates into a net annual salary of ?36,988 or ?3,082 a month. The family currently receive child benefit which is worth ?1,885 a year – giving a total income of ?38,873.

2023/24 After a ?6,000 a year pay increase, Sandra becomes a higher rate taxpayer for the first time. Her net income rises to ?40,949 or ?3,412 a month. Their child benefit would be worth ?2,075 a year, but because she earns more than ?50,000 a year, she also now faces the high income child benefit tax charge, that in this case cuts the child benefit payments in half. Despite a ?6,000 pay rise the family is just ?3,113 year better off – she has been taxed at almost 50% of her increase.

Married couple, no kids

First income ?150,000, second income ?85,000

2022/23 Out of Fred’s ?150,000 annual salary, he pays ?52,460 income tax and ?7,610 in national insurance, leaving him with a net ?89,930 a year. After deductions, Paddy’s ?85,000 is worth ?57,732. This gives them a combined net income of ?147,662 a year or ?12,305 a month.

2023/24 Both have managed to secure a 10% pay rise from their private sector employers. Their NI bills both fall due to the NI cuts announced last autumn – in Fred’s case by ?791 a year. Out of their combined new salary of ?258,500 they are left with a net income of ?161,008 a year – a jump of ?13,345 a year or ?1,112 more a month.

Single pensioner

New state pension

2022/23 Wendy’s state pension is ?185.15 a week or ?9,628 a year. She also qualified for ?950 of cost of living payments, give a total of ?10,528 a year.

2023/24 This pensioner will benefit from the 10.1% benefits uplift. Her basic pensions will rise by ?18.70 a week. She will receive cost of living payments worth ?1,200 over the coming year. Overall, she is ?1,272 a year better off.

Married pensioners

State pension plus plus ?8,000 private pension

2022/23 Once the first state pension is combined with the income from the private one, the holder receives a net income of ?15,392 a year. From this they lose ?564 to income tax. The second pension is worth ?4,420 a year giving a net, combined income of ?19,248.

2023/24 After the benefits rise of 10.1% is applied their tax bill increases to ?710 a year. Their income from the private pension is unchanged, meaning they have been hit hard by inflation over the last year. Overall they are ?1,050 better off this year than last.