By Esmée Hardwick-Slack
There was a lot of information in the Chancellors budget announcement, you’d be forgiven for not retaining it all. The real question is how it all affects you? Here’s a breakdown of how the measures will impact on you, your family, and your business:
Income tax
31 million people in the UK pay income tax, 25.6 million of these taxpayers pay at a basic rate (20%). The amount you earn before this basic rate of income tax is paid, your personal allowance, currently stands at £11,850. This is due to rise to £12,500 in April 2019. The higher rate income tax threshold, which starts at £46,350 currently, will start at £50,000 in April.
This change will boost the take-home pay of millions of people with an annual tax saving of £130 for basic rate tax payers and £860 for higher rate tax payers. This will cost the Treasury £2.8bn in the next financial year.
These levels will remain in place for the 2020/21 tax year but will increase in line with inflation thereafter. That means, as people earn more, they will not automatically be put into a higher tax band.
Universal Credit
Universal Credit is a single monthly payment for people on a low income or who are out of work. It replaces some of the benefits and tax credits such as housing benefit and Jobseekers Allowance. This reform is very complex, potentially affecting millions of people in different ways.
Various transition measures are to be introduced over the next five years, but no details have been released. However, the chancellor said that work allowances would be increased when the roll out of Universal Credit is complete.
Currently, many working-age benefits, like Jobseekers Allowance, Employment and Support Allowance and some types of Housing & Child Benefit, are three years into a four year freeze.
Wages
The National Living Wage, which is for workers aged 25 and over, currently sits at £7.83 an hour and will increase at a faster rate than the rising cost of living. The Chancellor announced in the Budget that this will increase to £8.21 in April 2019.
Self-employed
The Treasury believes that a third of people claiming self-employed status as a “personal service company” are actually working in the same way as employees and should be paying more income tax and national insurance.
After changing these rules in the public sector, the same is being done in the private sector from April 2020. However, this will only be used for those working for large and medium sized businesses.
Borrowing
The government is also extending the breathing space from legal action given those facing repayment difficulties, from six weeks to sixty days.
A no-interest loan scheme for the financially stretched to overcome vital and unexpected household costs will also be looked at. A study will take place next year, working out how a pilot scheme might work, this means it could be sometime before this becomes a mainstream option.
Let us know in the comments how the Budget will affect you. Don’t forget to follow us on Twitter to stay up todate with the lates news and blogs.
Related Articles:
