What does the 2018 Budget mean for your pocket?
Published 31 October 2018
This week, Chancellor Philip Hammond announced the government’s financial plans for the next year. Let’s take a closer look at what this could mean for you.
Budget Day came around again this week, with Chancellor Philip Hammond declaring it ‘a budget for hardworking families’.
His speech to Parliament on Monday afternoon outlined the government’s financial plans for the next year. Moving away from budget cuts in previous years, the Chancellor promised extra cash for the NHS, schools, defence, and housing.
But what does this budget mean for you? We’ve cut through all the jargon to bring you a breakdown of how the 2018 Budget will affect your finances.
More money for Universal Credit
Universal credit has had plenty of problems since it was introduced in 2011. Recipients have faced long delays processing their first payment, and many feel they are worse off under Universal Credit.
So the Chancellor has promised an extra £1 million to fix these problems and minimise the disruption to people moving on to Universal Credit, which replaces 6 separate benefit payments.
The Chancellor also increased the amount you can earn in work before your benefit payments start reducing. As of April next year, you can earn an extra £1000 before losing benefits, meaning low income families could take home an extra £630 per year.
Wages going up
In April 2019, the National Living Wage will rise by 4.9% from £7.83 an hour to £8.21 an hour.
So full time workers over 25 earning the National Living Wage could take home an extra £690 per year.
But if you’re one of the 1.9 million people earning the National Minimum Wage, don’t worry, you haven’t been forgotten. The Chancellor has confirmed that workers aged 24 and under will also get a pay rise next year, but he hasn’t revealed how much yet.
The amount you can earn before you start to pay tax will increase from £11,850 to £12,500 in April next year.
So if you earn less than £12,500, you won’t pay any tax in the 2019/2020 financial year. If you pay the basic tax rate (20% of what you earn over £12,500), you could take home an extra £130 per year.
And you won’t start to pay the higher rate of tax until you earn £50,000, meaning an annual saving of £860 for higher earners.
Cheaper beer, but more expensive cigarettes
With the average cost of a litre of petrol reaching a whopping £1.31 this week, it’s good news for drivers as the Chancellor promised to keep fuel duty the same for another year.
Beer, cider and spirits drinkers will also benefit from this year’s budget, as duty on these tipples was frozen for another year. But if you prefer wine or strong cider, you could end up spending more, as tax on these drinks will increase next year.
This year’s Budget could be bad news for smokers, as the Chancellor increased tax on cigarettes by 2%. So the average cost of a pack of 20 cigarettes will now rise above £10 for the first time.
The fuel duty freeze wasn’t the only good news for motorists in this year’s Budget, as The Chancellor promised £420 million to fix potholes on our roads.
Improving our roads could save you hundreds in the long run, as potholes can cause premature tyre wear, costly breakdowns, or even accidents.
What effect will this Budget have on your cash?
Whatever effect these changes have on your finances, don’t worry about your personal budget. The thinkmoney Current Account comes with a helpful budgeting service to help you pay all your bills on time, no matter what the future brings.
To find out if you’ll be better or worse off under this Budget, take a look at this calculator from the Independent. Just fill in a few details about your income and spending, and the site will tell you how much this Budget will save you (or cost you).