The final 2018 budget has been delivered. As the UK leaves the EU, the Chancellor Philip Hammond will be preparing the country for a “new chapter”. Therefore the aim is to strengthen the economy while opposing the slowly reviving Labour opposition. A lot of promises and statements have been made. Here is what they will mean for you.
Less Income Tax?
18,000,000 men and 13,000,000 women a total of 31,000,000 individuals pay income tax in the UK. Around 26,000,000 people pay this form of tax at the basic rate. The total you earn annually before the basic rate of income tax is paid is currently £11,850.
As of April (earlier than expected) this will be altered. The new amount will be £12,500 free of tax. The higher tax rate that starts at £46,350 at the moment, will be changed to £50,000 also in April.
Accounting specialists claim that this will result in a £100 saving for the basic rate tax payer. The amount for the higher rate taxpayer will be £860 and £600 for additional rate taxpayers. These rates could be however, reduced to £500 (for higher tax payers) due to National Insurance. All these changes are estimated to cost £2.8 billion in the next financial year.
These rates will be frozen the following year, but will increase with inflation thereafter. What this means is that, even if you will earn more, you won’t automatically be placed into a higher tax band.
Please be advised the income tax amounts will be different in Scotland. Any alterations will be stated in the Scottish Budget in December.
Benefits & Universal Credit
What is Universal Credit?
It’s a monthly payment for individuals on a low income or who are unemployed. It affects some benefits and tax credits that are categorised as housing benefits and Jobseeker’s Allowance.
This hugely complex welfare reform will be seen as a win for some and a loss for others.
The chancellor stated that work allowances would increase as soon as the roll out of Universal Credit is complete. A significant amount of working-age benefits are three years through a four-year freeze by April and this will remain unmodified. There is also a promise of £1 billion extra to help welfare claimants enroll to the new consolidated benefits.
The National Living Wage will increase faster than the rising cost of living.
- From £7.83 to £8.21 per hour those aged 25 and over
- £7.38 to £7.70 per hour for 21 to 24-year-olds
- £5.90 to £6.15 per hour for 18 to 20-year-olds
- £4.20 to £4.35 per hour for 16 to 17-year-olds
- £3.70 to £.3.90 per hour for apprentices.
The self-employed will also be affected. The Treasury believes that many individuals claiming self-employment are in fact working in substantially the same way as employees and therefore, should pay the same levels and types of tax. These include: income tax and national insurance. However, this will only affect medium and large enterprises.
The fuel duty will remain frozen for the ninth year in a row. On the downside the number of potholes will probably not decrease because the budget will only invest £420,000,000 into this problem. This small amount has already been heavily criticized by campaigners.
Debts and Loans
Those who found themselves unable to repay their debts from six weeks to 60 days can expect more “breathing space”.
A no-interest loan will be considered for those in financial difficulties to cover unexpected household costs. This scheme is very similar to the Good Shepherd project taking place in Australia.
First-time house buyers just as those who received concessions in the last budget will get up to £500,000. This will also be upheld for any individual who has bought certain types of property in the last year.
Lettings relief will be limited to properties in which the owner is in shared occupancy with the tenant.
The chancellor is claiming that the era of austerity is “finally coming to an end”. The 2019 growth forecast is predicting an increase of 1.3% to 1.6%. In addition to these optimistic statements, 800,000 more jobs are expected by 2022.