This afternoon George Osborne finally revealed the UK Budget for 2016, outlining the financial changes for the year ahead. Here I’ll explain just a few of the changes so you can figure out what the UK Budget announcement means for you:
Saving for the future could become that little bit easier
If you’ll be under 40 in April 2017, you’ll be able to open a brand new ‘Lifetime ISA’. You can save up to £4,000 each year in this account and benefit from a 25% boost from the government. This means for every £4 you put in the account, the government will give you £1. So if you fill the account to the max each year, you’ll benefit from a ‘free’ £1,000 annually!
The money you save in this ISA can be used towards a house (first-time buyers only) or your pension. If you’re already saving in a Help to Buy ISA, you can continue to do so and move your money over next year.
Learn more about this new development in this post: Lifetime ISA Explained
You may also like: Should you start saving for retirement in your twenties?
Basic rate tax payers will pay less tax
If you’re a basic rate tax payer, from April this year you won’t pay tax on any income under £11,000. From April 2017, this figure will increase to £11,500.
This will save many of us £112 per year, but it does nothing for those on very low incomes.
The price of soft drinks may rise
A fan of soft drinks? In order to reduce childhood obesity, George Osborne has announced a war on sugary drinks. From 2018, Osborne plans to penalise companies with large amounts of sugar in their drinks. This could encourage companies to bump up the price of their sugary products rather than alter their contents.
It’s predicted that this new sugar tax should raise £530m which – Osborne says – will be spent on improving sports facilities in schools.
Jamie Oliver has applauded the move – along with thousands of parents – as he’s been campaigning for such a change for years.
Longer school days
George Osborne has vowed to transform all public schools into academies by 2020. He also plans to introduce longer school days, which could spell bad news for teachers already feeling the pressure.
Osborne says: “I want to support secondary schools that want to offer their pupils longer school days with more extra-curricular activities like sport and art.
“So we’ll fund longer school days for at least 25 per cent of all secondary schools.”
No changes to the cost of alcohol (except for wine)
Whether you drink beer, cider, whiskey, or spirits, you’ll be glad to know that duty on these drinks is to remain frozen. Unfortunately, taxes will rise on wine. The Government expects to rake in £4billion from taxes on wine this year, and £4.2billion in 2016-17.
Insurance costs are set to rise
Although fuel duty will be frozen again, there is to be a rise in Insurance Premium Tax.
This was last raised from 6% to 9.5% in November and is set to rise again to 10%.
This will add to the cost of motor insurance, breakdown cover, and other forms of insurance.
Even non-drivers could be affected. Everything from healthcare insurance, home insurance and pet insurance is likely to rise also. Life insurance, however, is exempt.
