Wondering what George Osborne’s eighth budget as chancellor is all about and what it means for your finances?
From a new sugar levy on soft drinks to reforms to the education system, there’s plenty in there. Here at Bilgo we’ve picked out a few of the headline points to help you understand what the budget means for your money.
Increased personal allowances
The government says it's reducing tax on ‘working people’ by increasing the personal allowance – the amount you can earn before you start paying income tax – from £10,600 to £11,500 in April 2017.
The higher rate threshold, which is the point at which you start to pay a higher rate of income tax (40%), is also set to rise to £45,000 in 2017-18.
Increased ISA limits and a new ‘Lifetime ISA’
The total amount you can save into ISAs is set to be increased from £15,240 to £20,000 from April 2017.
The government is also introducing a ‘Lifetime ISA’, a new £4,000 ISA that can be opened by any adult under 40 from April 2017.
You can save up to £4,000 each year, and savers will get a 25% bonus from the government. That means for every £4 you put in, the treasury will put in £1.
Cash put into the account can used to buy a first home, or can be saved until you’re over 60 and used as retirement income.
Professor Philip Booth, academic and research director at the Institute of Economic Affairs, said: “The new ‘lifetime ISA’ will operate under rules completely different from those applying to ISAs and personal pensions and, for many, will effectively act as a state subsidy for the purpose of buying a house.
“This subsidy will be a transfer from one group of hard-pressed taxpayers to another group of people who can afford to save, to buy a house and who have the ability to work their way round this ever-more complex system.
“The measure smacks of political opportunism and is certainly not good tax policy.”
The new ‘Help to Save’ scheme
The controversial Help to Save scheme, announced by the Prime Minister earlier this week, means anyone in work and getting benefits like Universal Credit or Working Tax Credits will get bonuses from the government if they can save a certain amount each month.
If you manage to put aside £50 a month you will get a bonus of 50% after two years – up to a total of £600, the government said.
If you want to, you can then carry on for another two years and get another £600.
Mr Cameron said the move would give “hard-working people the extra support they need to fulfil their potential”.
But critics have said that government cuts elsewhere would mean some families will struggle to survive, let alone save.
Frozen beer and fuel duty
Good news for drivers. Fuel duty will be frozen again in 2016-17, saving the typical motorist £75 a year, according to the government.
The move means that by the end of 2016/17 fuel duty will have been frozen for six years.
Duty rates on beer, spirits and most ciders will be frozen this year.
Other moves include a reform to National Insurance contributions for 3.4m self-employed people. From April 2017 there will also be the introduction of two new tax-free allowances – one for selling goods or providing services, and one income from property you own.
They mean that people who make up to £1,000 from occasional jobs like sharing power tools, lift shares or selling things they have made, will no longer need to pay tax on that income.
In the same way, the first £1,000 of income from property, such as renting a driveway or loft storage, will be tax free.