The 2019 Budget: Explained
Don’t fall short this autumn, gen up on the most important changes following this year’s budget
This week, Chancellor Philip Hammond announced the changes we should expect in the new financial year. It’s often a minefield interpreting just how the budget will impact our finances. With Brexit upon us and talk of austerity, there are a few points to note. Here’s a simple break down of exactly how your finances are likely to change from April 2019.
Less tax, more cash in your pocket
The current personal allowance is £11,850. This is the amount we can earn in a financial year without paying any tax. However, from April your personal allowance will rise to £12,500. This will make a difference to the amount of money in your salary each month.
In addition, there have been other positive changes to the tax threshold. The higher rate tax threshold – the point at which you pay 40% tax instead of the basic 20% rate – is increasing from £46,350 to £50,000. This means you could receive an extra £130 per year, on your pay slip, depending on your earnings.
The national living wage is also going up – one to note for those over 25 years. At the moment, the national living wage sis £7.83 per hour. However, in the new financial year it will increase by 38p to £8.21 an hour.
Also announced is a freeze on the duty price of beer, cider and spirits. These items won’t increase in price, though if you’re a wine drinker, expect a slight increase in prices next year. The cost of wine will only rise in line with inflation, meaning the price of an average bottle will only increase by about 8p early next year.
Long-haul travellers pay more
For 2019, staycations and European holidays may be favoured over far-flung destinations! Although the duty tax on many things will be frozen for the next financial year, including short-haul flights, long-haul flights, however, will rise in tax in line with inflation. The duty tax on Economy seats will go up by £2 to £80, while premium economy, business and first class seats will rise by £4 to £176.
A spring-clean for universal credit
Universal credit was set up to merge all key benefits. Things like job seekers allowance, housing benefits and child tax credit. However, universal credit has not been a smooth transition from the old benefits system, which has meant people have missed payments and ended up in financial strife at times. However, it has now been announced that the government will be investing an extra £1bn over the next five years, which will ensure that universal credit system works effectively.
Digital companies will pay the price
Big tech companies – the likes of Facebook and Google – will now have to pay a ‘digital services tax’ from April 2020, meaning that they will need to hand over 2% of the money they make from UK users. It has been estimated that this will generate around £400m a year for the government.
Hammond said: “It is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without playing tax here.”
However, this particular tax might not actually ever come into fruition. A group of countries including the UK have already been planning a similar tax, which would mean this new tax is unnecessary.
Pension tax relief on the precipice
Hammond has left the pension tax relief as untouched, for now. However, there is speculation that this may be a temporary measure. Furthermore, longer term, if the Labour government gets in, it’s predicted that there won’t be such generous reliefs on the cards.
Increasing affordability for first-time buyers
Last year, the Chancellor abolished stamp duty for first-time buyers of properties worth up to £300,000. This year, Philip Hammond has announced that first-time buyers in England of shared ownership will not need to pay a penny on stamp duty for properties worth up to £500,000.
He’s even allowing people who applied retrospectively from the date of the 2017 budget (November 22, 2017), to take advantage of this benefit. There are an estimated 200k shared ownership properties in the UK which should result in a helpful boost for many people.
Boost in mental health
NHS mental health resources will receive a much needed boost of £2 billion next year. This is to support a new 24-hour mental health hotline, crisis teams in schools, in addition to an increase in mental health ambulances. These ambulances are normal-looking vehicles (to avoid stigma) dedicated to helping those in crisis as a result of mental health issues. (The NHS more widely will receive an extra £20.5 billion in funding in England over the next five years.)
Your wedding doesn’t have to cost the earth
Which of the world’s football transfers make the top 10?
How much will Harry and Meghan’s royal wedding cost?
What hidden costs are involved when buying a house?