(May 2012)

Things to consider for 2012: New unisex rates and child benefit changes

This tax year there are a few important changes in relation to financial planning. Two of the main considerations are:

  1. Unisex Rates
  2. Child Benefit

Unisex Rates

As I work in such a male-dominated industry, you may already know that I’m very pro-women in business. However, sexual equality can also have its downside and on 21 December 2012, unisex rates will come into effect. This should be taken into consideration when planning your finances. The areas that it will affect are as follows:

  • Life assurers will have to re-price their protection and annuity rates so that women’s and men’s rates will be the same
  • This would result in annuity rates falling for men meaning that men may be better off purchasing their annuity before this date
  • Female annuity rates would rise and so women could be better off purchasing after this date
  • Men’s life insurance rates may fall and therefore should be reviewed after this date
  • Women’s life insurance may rise so if you’re going to take it out you should do so before this date
  • Men’s sickness insurance rates could rise and therefore it may be preferential to take it out before this date
  • Women’s sickness insurance may decrease and therefore it may need reviewing after this date

Child Benefit

Another big change that’s coming is that people earning over £50,000 who are in receipt of child benefit will have to pay a tax charge of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000 pounds. In layman terms, this means that the amount of child benefit you receive will be reduced if you earn over £50,000 and will cease if you earn over £60,000.

You have a choice of either paying the tax or ceasing the child benefit, but caution is needed – If you are caring for somebody under the age of 12 and you are not working, you will be getting credits towards your state pension. If your partner earns over £60,000 and you decide to opt to cease the child benefit than you would also lose the credits towards your state pension.

You can see from the above changes and implications that it’s important to seek regular Independent Financial Advice. We offer a free initial no-obligation consultation where we will talk through all the options with you, in plain English.

To protect your finances, please pick up the phone and call us on 020 8760 9940 today.