The budget on the whole is not a good one for students who work part time and in seasonal employment to supplement their income to help support their studies.

First the good news; from April 2007 personal tax free allowances are up £190 to £5,225 and the starting rate band increases from £2,150 to £2,230.

Combining the personal allowance and the new starting rate band, most students will only begin to pay Basic Rate Income Tax (22%) in the tax year 2007/08 when their income exceeds £7,455.

Now the bad news; from April 2008, the starting rate tax of 10% will be removed and replaced with a revised basic rate tax of 20%.

Most students working part time are the lowest earners in the UK and the 10% tax band makes all the difference in their take home pay.

The change effectively means extra tax of £223 (an extra 10% on the first £2,230 of taxable earnings for tax year 2008/2009).

This extra tax will be recouped only if the student earns a further £11,150 to take advantage of the 2p tax reduction in the basic rate tax band
(£11,150 x 2p = £223).

This will mean a typical student with no further entitlement to allowances needs to earn a total of £18,605 per year to be no worse off in terms of tax than they are currently. Anything earned less than this means students will suffer a higher tax burden for every £1 they earn.

In our experience the average student earns approximately £7,500 per tax year and thus this change will mean they are £222 worse off under the new tax system.

There is an indirect increase in National Insurance, but this is unlikely to have any dramatic impact on most students.

“I am disappointed. the budget was unnecessarily harsh on lower paid workers. It doesn't make sense that mid to higher paid workers will be better off than they are at present; surely, this disparity runs against the ethics of a Labour Government”

The other announcements in brief are as follows;

· The National Minimum Wage increases to £5.52 per hour from October 2007 for those over 21; £4.60 for those aged between 18 to 21; and £3.40 for those aged 16 and 17.

· The Capital Gains Tax annual exemption increases from £8,800 to £9,200.

· The Inheritance Tax nil rate band, already announced for 2007/08 to 2009/10 will increase further to £350,000 from 6 April 2010. Students should discuss these aspects with their parents to ensure their inheritance is protected. Parents should be aware that an estate can attract 40% tax, before the amount is passed on to their beneficiaries, if a Will has not been appropriately drafted.

· Total education spending in England will rise from £63.7 billion in 2007/08 to £66.9 billion in 2008/09, £70 billion in 2009/10 and £74.4 billion in 2010/11.

· Petrol prices will increase by 2 pence per litre from 1 October 2007, with increases in the following two years of 2p and 1.84p respectively.

· Car tax rates will increase up to £400 for the most polluting cars, with a reduction of £35 for the cleaner cars. This change will take place over the next three years.

· Finally, tax on cigarettes is up 11p for 20, and 7p for hand rolled tobacco. Tax on beer is up 1p and wine is up 5p. The message is don't drink or smoke!

· However, if you wish to quit smoking, VAT on nicotine patches is reduced from 17.5% to 5%.