What is likely to happen to your spending power?

The contents of the Minister for Finance's speech on Budget Day next Wednesday will affect the net income and spending power of hundreds of thousands of families.

The case studies opposite were compiled by accountancy firm PricewaterhouseCoopers on behalf of The Irish Times. They outline how changes to social welfare benefits, tax reliefs and tax credits could either dent or boost the finances of five hypothetical families and a single person.

For example, our low-income couple, Jonathon and Ruth, earn a total of €28,000. They will be listening out for any changes to the married tax credit, the home carer's tax credit and the PAYE credit (currently €660), as any increases could mean they will drop out of the tax net next year.

If the Minister were to introduce tax relief on childcare costs, it would act as an incentive for Valerie, the mother in our single income family, to return to work. The family would then benefit from two incomes, like Brian and Sarah.

Alternatively, the family would benefit financially from increases in the home carer's tax credit (currently €770) or the rate band for single income couples - but only if Valerie stayed at home.

Currently, a single income married couple can earn up to €37,000 before being charged at the higher 42 per cent tax rate.

Kate earns €30,000. She will be taxed at the standard rate of 20 per cent on the first €28,000 - the standard rate threshold for single people - with the balance taxed at 42 per cent.

Between 2000 and 2002, the Government adopted a policy known as individualisation, which was designed to increase the level of income at which single people like Kate became liable to pay tax at the top rate.

It also aimed to ensure that standard rate bands were not transferable between spouses.

For full individualisation in the tax system to take place, the single person's standard rate band cut-off point of €28,000 would need to be increased to the married couple's standard rate tax band of €37,000. This married couple's standard rate tax band also determines how our high-income couple is taxed.

Helen earns €16,000, which means that part of her €28,000 standard rate tax band is unused. This can be transferred to Kevin, subject to the married person's tax band cut-off point. So Kevin is taxed at 20 per cent on the first €37,000 of his salary and 42 per cent on the remaining €53,000.

Michael and Eileen are retired and rely mostly on income from their occupational pensions and the social welfare old age contributory pension, which currently has a full weekly rate of €157.30.

Eileen's occupational pension is less than half that of Michael's: this may be because Eileen had a lower paid job than her husband or because she took breaks from paid employment.

The 2004 figures already show the impact of changes to the tax treatment of benefits-in-kind (BIK) such as company cars, preferential loans, gym membership and annual health insurance paid by an employer.

The changes mean that PRSI and the health levy will apply to the value of these benefits for the first time. This was actually announced in the last Budget, but does not come into effect until January 1st, 2004.

As it stands, Brian and Sarah's net monthly cash will drop next year as a result of the BIK changes, while Kate's net cash will plummet by more than €100.

If neither the standard rate band nor any of the tax credits or reliefs to which she is entitled is increased, Kate will have to find some way of compensating for her loss of income.Kate can earn up to €7,620 in rent tax-free. At the moment, she earns €4,800 in rent, meaning there is scope to bump up the rent without having to pay additional tax.

Raymond will also have to pay PRSI/health levy on his company car, subject to the employee PRSI ceiling, yet his and Valerie's net cash is set to increase next year.

This is because the new formula used to calculate the income tax due on company cars from next year will reduce the tax charged to people who have a high annual business mileage, depending on certain conditions.