Budget 2016 – what this could mean for your finances
Published 16 March 2016 by Kyri Levendi
A raft of financial changes were announced by George Osborne in the Budget speech, here’s what they could mean for you.
Changes to education, how we save, and updates to ISAs were announced by the Chancellor George Osborne in his 2016 Budget speech. To make sure you’re aware of how these changes could affect you, we’re going to run you through the main announcements:
Help to Save
A new savings scheme was announced to try and get people on low incomes and benefits saving again. Under this scheme, you’ll receive a 50% boost from the Government of whatever you put into a bank, up to the value of £300 a year if you receive Universal Credit or working tax credits. However, you won’t receive this money automatically – you’ll have to wait two years.
A new ISA called the Lifetime ISA was announced in the budget, with the aim of helping people save up to buy a home or for retirement. The ISA will be available for adults under the age of 40 from April 2017 with a maximum contribution of up to £4,000 a year. The Government will provide you with a 25% bonus of whatever you put in, so for every £4 that you save the Government will give you £1 until the age of 50.
The annual ISA limit will rise from £15,000 to £20,000 from April 2017.
All primary and secondary schools will become academies by 2020. There are plans for primary schools to be given funding for sport and a quarter of secondary schools to offer pupils longer school days with more extracurricular activities. All pupils up to the age of 18 may have to learn maths as well.
Money Advice Service
The Money Advice Service which was set up in 2010 is to be scrapped. The impartial site is to be replaced by ‘a new slimmed down money guidance body’ but details of this have been announced yet.
Minimum wage rise
The National Minimum Wage will increase by almost 4%, with a 25p rise to come in from October. This will bring the rate for 21 – 24 year olds to £6.95 an hour. The National Living for workers 25 and over is still set to come into force from April 2016 and will be £7.20 an hour.
The Personal Allowance – the amount that you can earn before you have to pay tax – is to go up from £11,000 a year to £11,500 from April next year.
If you’re self-employed, you will no longer have to pay Class 2 National Insurance contributions (currently £2.80 a week on profits of £5,965 or more for the current tax year) as these are to be abolished by 2018.
Insurance Premium Tax
It was announced that Insurance Premium Tax is to rise by 0.5% from 9.5% to 10%.
Fuel duty for petrol and diesel will remain frozen for the next year. It is thought that this could save the average driver around £75 a year.