We pick through all the key announcements from Philip Hammond’s Budget to work out what they mean for your finances.
Every year, the Chancellor of the Exchequer, Phillip Hammond, announces his annual Budget. This sets out the government spending for the year and impacts everything from how much your cigarettes cost to what pensioners will get from the state.
Here are the top 10 biggest announcements from 2018's Budget and what they mean for you:
1) Personal allowance
Your personal allowance is how much you can earn each year before you have to pay tax.
From April 2019, it will rise from £11,850 to £12,500, which means you can get an extra £130 in your pocket.
The government also announced a change to the tax brackets for higher earners. At the moment you pay 40% tax if you earn over £46,350 and under £150,000.
The 40% bracket is rising to £50,000, which will be worth £730 a year for anyone who earns that much or more.
2) Changes to Universal Credit
Universal Credit has caused serious problems for the Conservative government, and the Chancellor announced a series of measures to try and ease the burden for people on this benefit.
This includes an increase of £1,000 in the amount someone can earn before their benefits are withdrawn, coming into play in April 2019.
The government says that approximately 2.4 million households will be £630 better off each year as a result.
3) Minimum wages
The National Minimum Wage for over-25s will rise from £7.83 an hour to £8.21 from April 2019 – an increase of 4.9%.
4) Cost of alcohol
The Chancellor has announced another freeze on duty rises for beer, cider and spirits, meaning you won’t have to pay more tax. Wine drinkers may feel the squeeze, as the average cost of a bottle will go up due to a duty rise on wine.
5) Cost of petrol
Tax on petrol and diesel has been frozen again for the ninth year in a row. This is good news for motorists who won’t see costs go up due to tax. Even though duty has been frozen it, the cost of fuel can still go up and down due to market forces (cost of crude oil, seasonal demand), global events (wars, gas shortages) and new technology (new types of vehicles and alternative fuel sources).
6) Buying a first home
In 2017, the Chancellor introduced new rules that meant people buying a first home wouldn’t have to pay stamp duty as long as the house cost less than £300,000. This has now been extended to anyone buying on a shared ownership basis.
This extension applies retrospectively, so if you bought under shared ownership in the past twelve months, you should be able to get your money back.
What is shared ownership?
7) Cost of cigarettes
Tax on cigarettes goes up again at 2% plus inflation, meaning that the average cost of a packet of cigarettes will rise above £10.
8) Help to buy
The Help-to-buy equity loan scheme has been extended for two years, but only for first time buyers. There are new regional caps (set at 1.5 times the current forecast regional average first-time buyer price) too, ranging from £186,100 in the North East to £600,000 in London.
9) More help dealing with debts
The Government has announced that anyone who is under the care of an NHS mental health crisis team will have no debts or charges added indefinitely, while they are receiving treatment.
If you are in serious debt, a new interest-free loan system has also been announced. It’s designed to provide an alternative to high cost credit like payday loans. The government is working with debt charities and the banking industry to launch a feasibility study to help design a pilot for the scheme in 2019.
10) Millennial rail card rolled out
26-30 year olds will be able to get a new railcard that will get them a third off train travel. This scheme will be rolled out by the end of this year.
The card costs £30 to buy and must be downloaded onto a smartphone.
All information in this article has been extracted from the Budget document.
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