What does the Budget mean for you?
By our Head of Finance, Sarah Hurford-Potter
Well, the Chancellor’s budget yesterday may have been billed as the ‘end of austerity’ but, whether we believe that or not, and whether the large figures quoted in the budget actually mean real increases (i.e. above inflation) or are new money not previously announced will become clear as the full details emerge.
There has been plenty of comment from national bodies on the impact on the NfP Sector, including:
If you’re wanting to know “does the budget mean more or less money for me”, here’s a brief summary:
The personal allowance is increasing in April 2019 from £11,850 to £12,500. This means you can earn £12,500 without paying basic rate income tax (at 20%), so the increased allowance means paying £130 less tax per year for everyone earning £12,500 or more. There are also (less publicised) changes to National Insurance, making a total tax and NI saving of £155 per year for someone earing £12,500.
The higher rate income tax threshold (the level above which earnings are taxed at 40%) is also increasing in April 2019 from £46,350 to £50,000. So someone earning £50,000 or more will pay £730 less tax per year (this is in addition to the £130 per year for the increase in personal allowance). Along with an increase to National Insurance payments, someone earning £50,000 per year will make a total tax and NI saving of £520 per year.
The National Living Wage, for those aged 25 or over, is increasing from April 2019 from £7.83 per hour to £8.21 per hour – an increase of 4.85%. The rate for those under 25 is also due to increase, but the figure has yet to be announced.
If you drink wine, you’ll be paying 8p more per bottle for the privilege. For someone who drinks the recommended 14 units per week, that’s about one and a half bottles of wine per week, they’ll be paying an extra £6.24 per year in tax from the 1st February 2019. There’s no increase to the duty on beer, cider, and spirits, although there is an increase on some high strength drinks.
The increase to duty on tobacco, cigars and cigarettes is more significant with a pack of 20 cigarettes going up by 33p, tobacco increasing by inflation plus 2% and a 10g pack of cigars up by 17p – effective immediately. So someone smoking 20 cigarettes per day will pay an extra £120.45 per year.
One more positive announcement is that the government is extending the ‘breathing space’ from legal action given to those facing debt repayment difficulties from 6 weeks to 60 days. A no-interest loan scheme for the financially stretched will also be investigated next year – so maybe positive news for the future but no change for now.
And I’m sure we were all excited to hear about the plans for the commemorative 50p coin to mark Brexit…