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Budget 2017 – what does it mean for you?

Budget 2017 – what does it mean for you?

Category: Economy

Updated: 09/03/2017
First Published: 08/03/2017

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Chancellor Philip Hammond took to the floor earlier today to reveal his Budget for 2017 – which is set to be the last Spring Budget before it moves to an autumn arrangement – and by all accounts, it was a fairly lacklustre affair, at least for the typical consumer. Nonetheless, we've scoured the small print to hunt out the best nuggets of information, so read on to get an outline of the main points and see if anything will impact you.

NS&I bond confirmed

Perhaps the key announcement, for savers at least, was the confirmation that the NS&I Investment Bond will be launched in April, and that it'll pay 2.2%, unchanged from when the bond was first revealed in last year's Autumn Statement. Many had assumed that the rate will alter slightly – the Chancellor was at pains to point out that the rate would be set "according to market conditions" – so the fact that it'll still pay such a high rate is certainly welcome.

However, while it's set to be market-leading – few bonds even come close to this kind of level at the moment, as our Best Buys show, with the only exceptions being challenger banks – it may not be the saviour everyone's hoping for. After all, not only is the maximum investment allowance set at £3,000 (resulting in annual interest of just £66 in the first year), but with inflation forecast to hit 2.4% this year (another Budget revelation), it won't even be inflation-beating, meaning savers could actually lose money in real terms.

The message? The new bond may be all well and good, but don't see it as a silver bullet. Look elsewhere to make the most of your savings, and make sure to utilise every savings vehicle at your disposal, from cash ISAs to high interest current accounts, and even stocks & shares ISAs if you're comfortable with risk.

Personal allowances

As expected, it was announced that the personal allowance – the amount of money you can earn before having to pay income tax – will rise to £11,500 from April, with a commitment that it'll rise to £12,500 by the end of this Parliament.

The higher rate threshold, meanwhile, will increase to £45,000, before rising to £50,000 by 2020. The Chancellor says that 29 million people will be better off as a result of the higher allowances, with a typical basic rate taxpayer paying £1,000 less than they did in 2010.

Speaking of allowances, it was also confirmed that the 2017/18 ISA allowance will be £20,000, a whopping
£4,760 higher than this year's, giving you plenty of scope to boost your tax-efficiency and squirrel away as much as you can for the long term.

Self-employed NIC hike

Arguably one of the more controversial announcements was the planned hike to National Insurance Contributions (NICs) for self-employed workers. The Chancellor confirmed that Class 2 NICs will be abolished from 2018, but revealed that Class 4 NICs – which are paid on profits of between £8,060 and £43,000 – will rise by 1% in April 2018 to 10%, before rising by another 1% to reach 11% in April 2019.

It's an attempt to bring the system in line with that for employees, with a statement saying that "this better reflects the fact that the differences in contributory benefit entitlement between the self-employed and employees are now small, following the introduction of the new State Pension in April 2016".

The Chancellor noted that only a self-employed person with profits of more than £16,250 will have to pay more as a result of the changes, but even so, the announcement hasn't been well-received.

New ways to protect consumers

The Chancellor said that the Government will "investigate ways to protect consumers from unnecessary costs and inefficiencies," with a specific focus on subscriptions and misleading Ts & Cs.

It'll look at how consumers can be prevented from being charged unexpectedly when a subscription is renewed or a free trial ends – which means more emphasis could be placed on the specifics of a free trial and what happens afterwards – and terms and conditions will be made simpler, including for digital contracts. Companies could also be fined for misleading or mistreating consumers, offering additional recourse.

The move has been widely welcomed, as Dominic Baliszewski, director of Consumer Strategy for Momentum UK, comments: "Mr Hammond's decision to tackle subscription traps is a significant victory for consumers, millions of whom will have been caught out after inadvertently committing to a paid subscription after a free trial has ended. Often these fees are small enough to slip under the radar when people are assessing their finances."

Until any new rules come into force, make sure you're on the ball when it comes to your outings. Dominic points out that there are plenty of tools available to help people keep track of things, but simply checking your bank statement on a regular basis could be all it takes – monitoring your spending could be key.

Tax-free childcare

Parents will be pleased to hear that tax-free childcare was a key announcement of this year's Budget, with a new scheme being launched that will provide up to £2,000 a year in childcare support for each child under 12, and up to £4,000 for disabled children up to the age of 17.

Parents of younger children will be able to apply for the scheme first, it said in a statement, with all eligible parents able to access the scheme by the end of the year. Not only that, but "working parents in England will also be able to apply for an additional 15 hours of free childcare for three and four-year-olds, bringing the total to 30 hours a week".

So, this year's Budget was something of a mixed bag, but with no mention of anything to do with housing or pensions, many felt it didn't go far enough. Nonetheless, we'll keep you posted of any developments or announcements to come, and may even delve a little deeper into how some of the changes could impact you.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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