Here’s what today’s Budget means for YOU

Budget

It’s the day that everyone in the UK has been waiting for, and it finally arrived: Chancellor George Osborne’s first Budget. It’s a chance to see what direction he wants to take the UK, and what changes he wants to make to tax, benefits and other areas. For students, there’s a lot of good news: tuition fees are being frozen and loans are being expanded, making it more affordable for everyone to go to university! You can also use this formula in other areas to quickly write intro paragraphs for different types of blog posts. Just switch out the description part and replace it with one of the following: – Education – Science – Technology – News/Media – Business – Philosophy –

When the Chancellor of the Exchequer delivers the Budget, it always brings with it a great deal of speculation about how different sections of society will be affected. Using information from the HMRC, we can see the effect on the most common jobs, incomes and ages of people in the UK. The data shows that the self-employed are more likely to earn £10k-£20k than people in any other job category. The proportion of people working in these jobs who earn more than £30k is also higher than any other job category. In 2014, there were more people between the ages of 55-64 in this category than any other. If we look at the data about where these people

After a year of economic turmoil, one of the largest budgets in generations was approved today. That’s what it means to you.

Credit: james weston (background) – Shutterstock, james weston (background) – Chris McAndrew Wikimedia Commons

This year has been difficult for many reasons. The coronavirus pandemic has had a devastating effect not only on our general mental and physical well-being, but also on our finances.

While no one has been spared the hardships of the past 12 months, experts agree that young people will suffer the most economic damage, whether it’s a direct loss of jobs or a lack of opportunities in the future.

But while the light at the end of the COVID tunnel seems closer than ever, today’s budget has given the government a chance to discuss how to get out of this in one piece and hopefully come back even stronger. Did they do their job?

What is a budget?

Appropriation : Kubankit – Shutterstock

The Budget is an annual event where the Chancellor reviews the state of the country’s finances and announces the government’s tax and spending plans for the coming year.

The 2020 budget came as the coronavirus pandemic began to grip the UK, with Chancellor of the Exchequer Rishi Sunak pledging billions of pounds to combat the virus.

Within weeks, however, the country was already completely isolated and Sunak had to quickly announce a series of additional measures (including a social plan) to ensure the country’s survival over the next few months.

While we can’t rule anything out, it seems to be going a lot better this time around (knock on wood). Let us hope that the situation does not deteriorate in the coming weeks and that another second budget will be necessary.

No extra support for pupils

It’s a bit odd to start a budget discussion with something that wasn’t there, but for students across the country, there was a clear omission in the Chancellor’s speech.

Despite calls from students, politicians and many others, including all of us at Save the Student, Rishi Sunak has not announced any additional funding to support victims of the coronavirus pandemic at the university.

Our recent National Student Accommodation Survey (NSAS) shows that students spent around £1 billion this year on accommodation they couldn’t move into due to blockchain restrictions.

Some might argue that students would have spent the money on housing anyway, but it should not be forgotten that the sectors where students usually work during their studies (such as hospitality and retail) were also the hardest hit by the coronavirus.

Add to that the thousands of parents who have been laid off or lost their jobs and therefore can no longer make the financial contributions they used to, and it is clear that students are in a precarious situation.

In fact, the last of our two surveys on the impact of COVID-19 on students found that nearly half of respondents were concerned about money in the context of the pandemic. Some students compensate for lost income with credit cards, gambling and sex trafficking, among other things.

The government recently announced a £50 million increase for students in England. But as NUS vice-president for higher education Hilary Gibi-Abadio told our NSAS, if the government wanted to get the same per-student funding as Wales, it would have to provide more than £700 million.

From the announcement of school closures to the promise of full-time classes this year, students have felt ignored and taken for granted throughout the pandemic – and today’s announcement (or lack thereof) feels like a repeat of history.

Increase in minimum wage

Appropriations : Paramount Images

Raising the minimum wage at the beginning of the new tax year (every April) is normal practice. Thanks to the coronavirus, inflation in the UK is low, so the increase in the minimum wage is also very modest.

These figures have already been announced, but today the Chancellor of the Exchequer confirmed the following changes to the UK minimum wage, which will come into effect from April 2021:

Age Current minimum hourly wage New minimum hourly wage
23+ (national cost of living)* £8.72 £8.91 (+2.2%)
21-22 £8.20 £8.36 (+2.0%)
18-20 £6.45 £6.56 (+1.7%)
16-17 £4.55 £4.62 (+1.5%)
The pupil £4.15 £4.30 (+3.6%)

* Until April 2021, the National Living Wage will only apply to people aged 25 and over.

Is this good news?

It’s only a small increase, but any extra money is still extra money, although of course it’s linked to inflation, so it just helps you cover the increased cost of living in the UK.

The extension of the national living wage to 23 and 24 year olds is also a positive step and gives a glimmer of hope to students and graduates facing one of the most difficult labour markets in a generation.

And we remind you that it is always worth checking your pay slip to make sure that your employer respects your employment rights and is paying you the right wage, regardless of your age group.

Not checking salaries is one of the biggest financial mistakes you can make, and it can end up costing you a lot of money.

Tax thresholds frozen

Even if you don’t have to pay them right away, it’s helpful to know where you stand in terms of income tax.

Until the last Budget, the income tax threshold was steadily increased to its current level of £12,500 (all money earned before this threshold is exempt from tax and is known as the personal allowance). Since wages generally increase from year to year, this annual change was intended to ensure that lower-wage workers would not be so affected by the additional tax they would have to pay.

Despite a planned increase this year to £12,570 in April, the personal allowance will be frozen at that level until 2026. This means that workers will essentially pay more income tax as their incomes inevitably rise.

Is this good news?

Imagine you earn £20,000 a year. With the new income tax threshold of £12,570, you only pay tax on the £7,430 you earn above this threshold.

Let’s say your salary has increased to £21,000. If the personal allowance is increased to, say, £13,000, you now pay tax on the £8,000 you earn above that threshold – you still pay more tax, but less than if the threshold had not been increased.

But with the personal allowance frozen at £12,570, there is no way to soften the blow. In that case you will have to pay tax on the £8,930 you earned above the threshold. While not technically a tax increase, most workers will likely have to pay an additional income tax, especially since the freeze will last for five years.

Of course, the basic tax rate is only 20%, and since wages are unlikely to rise during an economic recession, this will likely have little impact on your salary. And let us not forget that this tax helps to finance all the public services on which we depend, not just in the event of a pandemic, but throughout our lives.

But precisely because we are experiencing tough economic times, many people will say that anything that exacerbates the financial problems of the lowest paid is unfair – especially since this segment of the population has already felt the effects of the past year more than most.

Our guide to basic tax facts is a good starting point for understanding everything.

Discharge programme extended until September

Appropriations : Maderla – Shutterstock

Coronavirus’ job retention program, better known as a social plan, has been in place for almost a year now.

The scheme, which was announced when businesses across the UK had to close during the initial lockdown phase, allows employers to apply for a government grant to cover up to 80% (up to £2,500 a month) of an employee’s salary if they are unable to work due to restrictions caused by the coronavirus.

Originally, the holiday was only supposed to last until the end of May 2020, but after several extensions, the end date has become May 30. April 2021. However, the Chancellor announced today that it will expire at the end of September 2021.

Is this good news?

In the past, while the expansion of the redundancy programme has been welcome, it has been somewhat worrying. We’ve never known a world where firing people didn’t mean restrictions on daily life, so extending a business trip has always been a sign that we have a long way to go before we get back to business.

However, given that the government’s roadmap for abolishing lock-in indicates that some restrictions will not take effect until mid-June, it makes sense to maintain the redundancy programme at least until then.

But why has Rishi Sunak decided to extend till the end of September? There are two things to keep in mind here.

First, the legendary date of the end of the lockdown on the 21st. In fact, June is only the earliest date that the final restrictions can be lifted. While we all hope that this will happen, it is possible that the virus is still too threatening to return to normal at this time. So, just in case, it is advisable to have a redundancy plan in your pocket.

Most importantly, the extension of the program until the end of September will give companies additional time to get back on their feet. Many experts feared that if the layoffs ended after June, there would be a wave of unemployment because companies couldn’t afford to suddenly rehire everyone.

Some dignitaries are advocating extending the leave period, perhaps even to 2022. It remains to be seen whether this will be the case, but for now the extension until the end of September is a welcome step.

Extension of the increase of the universal credit

Appropriation : Michaelasbestos – Shutterstock

Other measures taken early in the pandemic to mitigate its economic impact included a temporary increase in universal credit payments.

The Chancellor of the Exchequer today promised to extend the £20-a-week surcharge for a further six months, until the end of September.

Is this good news?

For some time, Universal Credit claimants and charities representing people on low incomes have been urging the government to extend benefits for a few months or indefinitely.

The extra £20 a week has proved invaluable to families across the UK and helped millions of people afford essential food items, according to the famine relief charity Trussell Trust. The foundation also pointed out that hundreds of thousands of parents would be forced to cut back on their children’s meals if the additional payments were eliminated.

Citizens Advice Scotland’s analysis shows that without the extra £20 per week, Universal Credit payouts would cost less than in 2013 (adjusted for inflation).

While many argue that Universal Credit benefits are still not enough to support those in need and that the increase should become permanent, it is certainly good news that the £20 increase has not yet been cancelled.

Contactless maximum increases to £100

Appropriations : Jacob Lund – Shutterstock

Last year the limit for contactless payments was increased from £30 to £45 to reduce the risk of Corona virus spreading through cash and PIN pads.

Following a consultation, it has been announced that you will soon be able to spend up to £100 per contactless transaction.

Is this good news?

While we all appreciate the convenience of contactless payments, some have legitimate concerns about the security of such a significant increase in the limit. What happens if someone steals your card and tries to spend the money?

The data shows that when the limit was raised at the beginning of the pandemic, the level of contactless fraud increased very little.

In addition, the current restriction requiring the PIN to be entered after five consecutive contactless payments will continue to apply and the amount that can be spent with these payments will be limited to £300 (i.e. still less than five payments of £100).

Of course, £300 is still a lot of money to lose. Some argue that people should be allowed to set their own limit for contactless payments, up to £100, which would certainly help ease concerns about such an increase.

But until such a change is made, you may need to pay more careful attention to your bank card than ever.

Freeze all alcohol rights

Appropriation : Syda Productions – Shutterstock

As you may or may not know, beer, wine, cider and spirits are all subject to state tax.

These taxes (or tolls, as they are also known) don’t just make money for the government – they are also seen as a way to help people get off alcohol. After all, you’re less likely to get a seventh pint if it hits your bank account more than your head.

But after perhaps the toughest year pubs have ever had, the Chancellor has frozen all taxes on alcohol, as he did last year and as Phillip Hammond, the then Chancellor of the Exchequer, did the year before.

Is this good news?

For those who drink, the freeze on alcohol taxes will certainly help you save money when you go out. And for those pubs that were closed or operating at reduced capacity for most of last year, hopefully this will bring in some much needed cash.

But that doesn’t mean the cost of alcohol won’t rise – if manufacturers and retailers decide to raise prices, they can (and will).

Fuel tax freeze

Appropriation : Syda Productions – Shutterstock

Not only alcohol, but also fuel is subject to excise duties.

The fuel tax has been frozen for the past decade and despite a planned increase this year, the finance minister has frozen the rate again.

Is this good news?

From a purely financial point of view, it is the motorist who benefits: an increase in fuel tax would mean that it would cost him more to fill up every time. So if you freeze it, you save money on the ticket price.

However, many believe that if the government is serious about tackling climate change, it should discourage people from using private cars, especially those that run on petrol or diesel.

An increase in fuel duty would be a step in that direction and, as Caroline Lucas, MP for the Green Party, noted, the freeze comes against a backdrop of ever-rising rail fares, while public transport is a more environmentally friendly alternative to car ownership.

So whether the fuel tax freeze is good news or not depends on your priorities.

Are you angry that the coronavirus has disrupted your university? To find out how to make a claim, click here.

This source has been very much helpful in doing our research. Read more about how to make a monthly budget and let us know what you think.

 

About the Author: Prateek

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