Missed out on the details of the Budget speech, or not sure how what you’ve heard will affect you? Don’t fret – we’ve picked out seven announcements Philip Hammond, the chancellor, made yesterday that you need to be clued up on, as they may impact your future finances.
Also, be sure to check out our New Year Laws article, as there’s a lot coming into effect from April 6th that was announced before the Budget yesterday that you may have forgotten is round the corner!
1.Personal Allowance increase
One of the announcements concerned Personal Allowance, which is the amount anyone can earn before being taxed. Currently you are only taxed on anything you earn over and above £11,000 a year, and this has been increased to £11,500 from April 6. A typical basic rate taxpayer will be paying £1,000 less tax in 2017 than in 2010 – which over the years really adds up!
2.National Living Wage increase
From April 6, the National Living Wage – which is essentially the minimum wage for those over 25 – is set to rise to £7.50 an hour, a 4% increase on the current £7.20 an hour. In real terms, this equates to an extra earning of £500 compared to last year.
Philip Hammond has pledged that the National Living Wage should reach £9 per hour – or the equivalent of £17,550 a year for someone working 37.5 hours a week.
The minimum wage for those under 25 will be increasing too, but not by such a margin.
3.Universal Credit Taper Relief rate
The Universal Credit ‘taper rate’ refers to how quickly a benefit is withdrawn as recipients earn more and therefore, theoretically, rely on benefits less to top up their income.
As was announced in November 2016, from April 6, the rate will fall from 65% to 63%. While the percentage drop may look like a negative thing, it’s actually good news for those earning more, as they will get tax relief that amounts to an extra 2p on every pound they earn from employment. This is anticipated to cut tax for 3 million families on lower incomes.
4.Increased access to free childcare
From September this year, working parents with children aged three and four will have their free childcare entitlement doubled to 30 hours a week, which could be worth up to £5000 per child.
The government will also introduce their tax free childcare policy, rolling it out from April onwards and starting with parents of the youngest children first, although you’ll be able to apply for all your children at the same time. The idea is that you will open an online account that you pay into to cover the costs of childcare with a registered provider, and for every 80p you pay in, the government will top it up with another 20 pence. Parents can receive up to £2,000 a year for each child they have under 12 years old.
5.Sugar tax and money for schools
This one has been rumoured for a while. The scheme has been backed by a lot of high profile supporters like TV chef Jamie Oliver, and yesterday Philip Hammond announced two levies on sugary drinks to come into effect from April 2018, in the hope it will curb obesity in the UK, particularly in children.
Drinks that contain more than five grams of sugar per 100ml will be taxed by 18p per litre, while those with eight grams or more of sugar per 100ml will have an extra tax of 24p per litre. Pure fruit juices and milk based drinks are excluded from the new rules, which really focus on fizzy drinks. In reality, this means that a 500ml bottle of regular Coke or Pepsi will cost you 12p more than it does today, because their sugar content means they’ll be taxed at the full 24p per litre rate.
The money raised, which is estimated to equal £1 billion, will go to the Department for Education (DfE), the idea being that they will use it for school sports and healthy living programmes.
6.New ways to protect consumers
As part of the Budget announcements, the government has pledged to launch an investigation into the ways consumers can be protected from unnecessary costs, like subscriptions that auto-renew without warning, or automatically commence at the end of a free trial.
Although they haven’t indicated what their plan will be yet, they have mentioned simplifying the terms and conditions of digital contracts, like those you “sign” when you join a social network.
This is obviously good news for everyone, as unwanted subscriptions that you seem interminably bound to are a real drain on finances over time, and taking steps to make terms and conditions simpler to read through can only be a good thing for us all, too!
7.Social care funding
Social care has been a hot topic lately, with recent events and news prompting many to call on the government to offer more funding to this area.
Perhaps in response to this, one of Philip Hammond’s announcements was an additional £2 billion in funding to social care over the next three years and a green paper into how to solve the wider funding problems the UK will be facing.
A £100 million fund has also been set up to fund A&E departments for next winter, and Hammond has pledged £425 million in investment in the NHS to ensure sustainability of care levels across regions.
What do you think about the announcements of the new budget? Let us know in the comments section.