The Big Budget Breakdown 2018
30th October 2018
Budget announcements are always followed by a mad scramble of people trying to work out exactly what it all means. It can be tough to make clear-cut predictions, with the shadow of an uncertain Brexit looming over everything.
Last year, living standards think tank Resolution Foundation told us we were facing “the longest period of continuous falls in disposable incomes in over 60 years”. So, what does the new Budget do to tackle that? Here are some of the key points:
Personal Tax Allowance and Living Wage
- From next April, you’ll be able to earn £12,500 before you start paying tax. That’s up from the current threshold of £11,850.
- The threshold at which your tax will jump from 20% to 40% is going up from £46,350 to £50,000 at the same time. Both thresholds will then rise to keep up with inflation.
- Scotland has its own tax rules and rates. People there will have to wait until the 12th of December to see what’s what.
- The National Living Wage is going up almost 5% to £8.21 per hour.
- Apprentice wages will rise to £3.90 per hour.
What this means for you: That translates to £130 more in the pocket of the average British worker.
If you earn between £46,350 and £49,999 per year then you'll be slightly better off stilll as the higher rate tax bracket has been pushed up £50,000.
- The amount you can earn before your benefits get cut is rising by £1,000. Basically, almost 2.5 million families on Universal Credit will find an extra £630 in their pocket each year.
- Benefits themselves are staying where they are until 2019/20.
What this means for you: Universal Credit claimants will get an extra £1.7billion a year in higher work allowances by 2023.
Construction and Housing
- First-time buyers won’t pay Stamp Duty on shared ownership properties, where they part-buy and part-rent a home.
- An extra £500 million of funding was announced for the Housing Infrastructure Fund, including £291 million for London. This is aimed at building 650,000 new homes.
- The British Business Bank, which helps smaller business unlock finance, will offer guarantees of up to £1bn for firms building homes.
What this means for you: If you're buying a shared ownership home this is a bit of good news as stamp duty relief is now being applied to properties costing up to £500,000. If you bought one since the 2017 Budget then don't worry, you'll be eligible too. But for many people getting on the property ladder is still a distant dream.
If you work in the building trade then there could be new work opportunities on the horizon, particularly with the skills shortage that we've covered in recent months.
Fuel and Travel
- Fuel tax stays steady for the 9th year in a row.
- All vehicle tax will be put toward improving roads.
- Councils are getting £420 million to help fix potholes.
What this means for you: you won't see a jump in prices, which is good news, but the cost of running your car isn't going to go down either.
Travel expenses for work account for 74.8% of the tax refunds we claim for people, so remember to keep your receipts or take a photo at the pump!
- The UK’s “going it alone” on a new 2% digital services tax, hitting global online giants that have over £500 million in worldwide sales.
- Private Finance Initiatives, where public services are provided by private companies, are being scrapped. Existing deals will carry on, though.
- Business rates are coming down by over a third for companies with rateable values of £51,000 or less.
- The rules for how public bodies handle contractors are being rolled out to medium and large private companies from 2020. Basically, firms will have to take more responsibility for clarifying if their workforces are genuinely self-employed.
That's just a basic round-up for now, but we’ll be taking a closer look at the fine details in the coming weeks. Meanwhile, remember to come to RIFT with any problems or questions you have.