Yesterday, the government gave its annual Autumn budget, this year’s being the final Budget before the UK leaves the European Union next year.
The budget has risen from £264.1 billion in 1998, to a huge £859 billion this year! You’d be forgiven for thinking it’s nothing more than a display of luggage followed by a lot of jeering in the House of Commons, but there is some method to the madness!
How does it work?
Since November 2017, the country’s Budget has been revealed in Autumn each year, ready for implementation the following April, at the start of the new tax year.
You can get a really detailed account of how this works here but essentially, the Autumn Budget is a statement made to the House of Commons by the Chancellor of the Exchequer. In this statement, he or she reveals the government’s plans for changes to funding, taxes and wages in the following financial year, along with details of the country’s financial situation and forecasts.
Once their speech has been delivered, the Chancellor traditionally gives the floor to the leader of the opposition to respond to the speech.
This kicks off 4 days of debate on the Budget resolutions, with each day of debate usually covering a different area, such as education, health and defence.
The proposed changes to the budget, if agreed by the House of Commons, can then be turned into a ‘Finance Bill’ which will be passed through Parliament in the same way as any other bill, turning the budget proposals into law.
How does this impact me?
It’s easy to assume that these changes don’t impact you, or that they are so small they will be unnoticeable in your day-to-day life but that’s not the case.
Changes to the Minimum or National Living Wage and tax threshold adjustments can mean you take home more money each month. The introduction of new policies on healthcare or transport can change how you use these services, and tax on goods such as alcohol can impact how much you pay for a pint!
For example, changes to this year’s Personal Allowances will mean workers will take home more money annually from April 2019, with full-time basic tax rate payers taking home an extra £130 annually!
There are also changes to the National Living Wage which will mean millions of people will see their wage before tax go up.
It’s important to take an interest in the yearly budget to help you understand how you might be impacted by these changes at the start of the new tax year, but also to keep updated on new policies you might be able to take advantage of. Changes to rail cards, first time buyer schemes, universal credit, tax relief and much more are all discussed during the Budget.
Being aware of what has been proposed and debated during the Budget each year can also help you to understand the different ambitions of the political parties to help you come to a decision about voting in the future.
So, what plans were revealed in this year’s budget?
This year’s budget saw some changes that will positively impact those living and working in the UK:
- A railcard was announced for young people between the ages of 26 and 30. It will see them save 1/3 on their rail journeys
- The National Living Wage for over 25s will increase from £7.83 an hour to £8.21 in April 2019. This equates to a raise of £690 annually for a full-time worker
- The tax-free Personal Allowance will rise to £12,500 in April 2019 – this means a basic rate tax payer won’t pay tax on a further £650 of income in 2019-2020 compared to 2018-2019. This equates to a saving of £130 in tax for a basic rate taxpayer
- The higher rate threshold will increase from £46,350 to £50,000
- There will be no rise in Duty on beer, cider and spirits and Air Passenger Duty will not rise
There were also several announcements about funding, detailing the government’s plans to support the struggling high-street and fund improvements to roads and the country’s defence.
- Over £1.5 billion to support the high street in the form of business rate cuts, improvements to transport links and re-development of empty shops into homes and offices
- £1 billion more for defence over the next two years, aiming to help protect the UK against changing threats such as cyber-attacks
- £400 million extra for schools this year, which equates to £10,000 for the average primary school and £50,000 for the average secondary school
If you want to learn more about the specific plans announced, you can read the breakdown of 24 things you need-to-know from this year’s Budget on the government’s website.