Yesterday's Budget was heralded by Chancellor Philip Hammond as one that would "help families to cope with the cost of living," but will it? We take a look at what the key policy points could mean for you.
Stamp duty reform
The big announcement was that stamp duty has been scrapped for first-time buyers on homes worth up to £300,000, while those seeking a property worth up to £500,000 will pay no stamp duty on the first £300,000. This could see 80% of those buying their first home paying no stamp duty at all, and could ultimately benefit 95% of first-time buyers, with an average saving of £1,660. You can find out more about the tax break by reading our full overview of the change here.
Higher income tax brackets
Another welcome measure was the confirmation that the personal allowance will rise to £11,850 from April, up from its current level of £11,500, which will mean that workers can earn more before income tax is payable. The higher rate threshold – where the 40% tax rate kicks in – will also increase, from £45,000 to £46,350.
State pension rise
The Budget confirmed that the triple lock will once again be applied to pensions, which means that the state pension will rise by 3% in April (the triple lock means that the state pension will rise by inflation, average earnings or 2.5%, whichever is higher. Currently, inflation is running at 3%, which means this is the figure that will be used).
The 3% rise equates to a cash increase of £3.65 per week for the full basic state pension (from £122.30 to £125.95 a week), resulting in an increase £191 per year and an annual income of £6,550. The new state pension, meanwhile, will see a cash increase of £4.80 per week (from £159.55 to at least £164.35), equating to a rise of almost £250 per year and an annual income of £8,550. It's only those pensioners who have reached state pension age since 6 April 2015 who qualify for the new state pension.
At the same time, the lifetime allowance - the amount you're able to hold in a private or workplace pension without being liable for tax charges - has also increased in line with inflation, and will stand at £1,030,000 for the 2018/19 tax year.
Electric cars and fuel duty
Fuel duty has been frozen again, a move that will no doubt be welcomed by drivers. In other car-related news, those who buy new diesel cars from April next year will pay higher road tax – the first-year rate will be calculated as if they were in the tax band above – unless they buy a next-generation clean diesel car (those that have been certified as meeting emissions limits in real driving conditions).
The Government is also pledging to support the rollout of electric cars, by providing £100m to help people buy such vehicles through a plug-in car grant,
pledging a £400m charging infrastructure fund, investing £40m in charging research and development, and ensuring that all new homes are built with suitable cables for charging points.
A "millennial" railcard
A new railcard is to be introduced for those aged 26-30, with the current standard railcard ending at the age of 25. It's touted as being a way to give 4.5m more people a third off their rail fares, but just bear in mind that the card can't be used at peak times, so those who use the train to commute to work won't be able to benefit.
Added extras
- NHS. A commitment to invest over £6.3bn of new funding.
- National Living Wage. The National Living Wage will rise by 4.4% in April, from £7.50 an hour to £7.83, giving the lowest-paid full-time workers an annual pay increase of £600.
- Fuel duty and cigarettes. Duties on ciders (except high-strength white cider), wines, spirits and beer will be frozen. However, duty rates on all tobacco products will increase by 2% above inflation (as calculated by the Retail Prices Index, or RPI), with an additional 1% duty on hand-rolling tobacco, with both coming into effect yesterday.
- Air travel. The Chancellor said that he's freezing short-haul air passenger duty rates and long-haul economy rates from April 2019, to be paid for by an increase on premium class tickets and private jets.
- Business rates. The Government is bringing forward the planned switch in calculating business rates from RPI to the Consumer Prices Index (CPI) by two years, to April 2018, a move that the Chancellor says is "worth £2.3bn to businesses over the next five years".
- Universal Credit. Various changes should mean that claimants will now have to wait a week less to receive their first payment, yet it could still mean a five-week wait. However, those who qualify will also be able to access a month's worth of support within five days, via an interest-free advance, from January.
- Slower growth. One of the big takeaways for many was the downgrade in economic growth – the Office for Budget Responsibility now expects the UK economy to grow by 1.5% this year, down from its previous prediction of 2%, while growth next year will slow to 1.4% and 1.3% the two years after that – which could mean that families will continue to feel the squeeze for longer.
