Today, the Government has unveiled its Spring budget – the first from Boris Johnson’s majority Government. It is also the first budget from the new chancellor of the exchequer, Rishi Sunak. This budget was originally expected to focus on levelling-up the UK economy, but with the Covid-19 outbreak impacting global markets, it was bound to have an impact on the budget.
These are the key points from today’s budget that will impact your finances:
In the budget, the Government has revealed that it will increase the Junior ISA (JISA) and Child Trust Fund annual subscription limit from £4,368 to £9,000 during the 2020/21 tax year. The annual subscription limit on ISAs will remain at £20,000 during the 2020/21 tax year. As well as this, for those with an income of less than £17,500, the starting 0% tax rate on savings will remain at £5,000 for the 2020/21 tax year. Meanwhile, it was also announced in the budget, National Savings & Investments (NS&I) will have a net financing target of £6 billion for the 2020/21 tax year, within a range of £3 billion to £9 billion.
Although it was predicted that the Government would reduce Stamp Duty, this was not part of the spring 2020 budget. Instead, the Government announced that it will introduce a 2% Stamp Duty Land Tax (SDLT) surcharge for non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.
Those with a pension will be able to pay more money into their pension pots during their lifetime, as the Government announced an increase in lifetime allowance for pensions. The lifetime allowance for pensions will increase from £1,055,000 to £1,073,100.
From 6 April, many workers will see their pay increase, as the Government announced a rise in the National Insurance payment threshold, from £8,636 to £9,500. This means that workers will not pay National Insurance tax on the first £9,500 of their earnings.
Although not part of the budget, this morning the Bank of England announced that it has cut base rate by 0.50% (50 basis points) to 0.25%. At the same time, the Bank of England also revealed an extension to the Term Funding Scheme, with additional incentives for SMEs. The Term Funding Scheme has been extended for four years and is expected to release over £100 billion in funding. While this funding will be primarily aimed at encouraging banks and building societies to provide cheap lending to businesses, it can also be used to support lending to consumers through mortgages and loans. As a result, banks and building societies will not be as reliant on funds from savings deposits, which, combined with the base rate cut, will likely see savings rates fall further over the coming months.
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