Wake up and smell the roses

Today, I listened to Philip Hammond’s 2018 Budget Speech so you don’t have to.

Stripping out all the boring bits about debt and GDP, digs at the opposition and loo jokes (srsly), here are the bits that actually hit the pounds in your pocket. I’ll skip over attempts to rap Facebook, Google et al over the knuckles with a “Digital Services Tax”, because who knows how that will work in practice?

If you want a flavour of the speech, just mutter ‘hard work’ at regular intervals, as the Chancellor banged on about it 10 times (I counted. See also: “hard-earned”).

On a budget? Here’s how the 2018 Budget affects you

Anyhoo, here are the headlines for anyone living on less:

Nothing extra at the pump

• Fuel duty is frozen, so you won’t pay extra tax at the petrol pump.

Hurrah for gin

• Good news for drinkers too, as duty is also frozen on beer, cider and spirits. Hurrah for gin indeed.
• However, wine guzzlers will pay an extra 8p a bottle from February.
• Plus Hammond’s got it in for White Lightning – expect a new higher rate tax on white ciders.
• Smokers will still see tobacco duty go up by inflation plus 2%. G’wan g’wan g’wan give up.

Get £130 off your tax bill

• Next year, we get to keep more money than expected before starting to pay tax.
• Right now, you can earn £11,850 during the tax year before paying any income tax. It’s know as the Personal Allowance.
• But from April 6 next year, that’s going up to £12,500, which means you’ll hang on to an extra £130 a year.

Earn more before paying higher rate tax

• Similarly, we’ll be able to earn more before paying higher rate tax.
• From April 2019, 40% tax will only kick in on income over £50K a year, rather than £46,350 now. This means high earners will pay £730 less income tax. Dandy if you already earn mega bucks.
• However, Phil also moved the goal posts on National Insurance contributions (NICs). High earners will get hit with a bigger NICs bill, clawing back half the saving on income tax. Sneaky.

Pay rise for the National Living Wage

• Anyone on the national living wage should get a pay rise, when it goes up from £7.83 to £8.21 an hour. Don’t hold you breath though, it only starts next April.

Rate cut for small businesses

• Small businesses like cafes, restaurants, pubs and shops can start celebrating, because Hammond’s slashing a third off business rates, for property with rateable values of £51,000 or less. This should save up to £8,000 a year, starting from April 2019.
• Zip all to cut parking cost though, which affect footfall.

Sop to shore up Universal Credit

• Sadly, the Chancellor is still insisting that the vicious mess known as Universal Credit is “here to stay”.
• However, he did promise to bung another £1.5 billion to help with implementation, plus another £1 billion over 5 years to help existing benefit claimants make the painful transition to Universal Credit.
• Sounds a big number, suspect it will be a drop in the ocean.

Reckon Universal Credit will still be driving people to food banks, so do consider taking part in #Foodbankadvent (details here).

Mini breaks are go

• No change to passenger duty on short haul flights (go mini break go!)
• Otherwise air passenger duty will go up with inflation from 2020.

Drop in the ocean on plastic waste

• Some virtue signalling about plastic waste – consulting on regulations to tax plastic packaging made from less than 30% recycled plastic, and “watching” the drinks industry to see if they do anything about disposable plastic cups.

Previous post: how to use less plastic and cut costs

Token effort for schools

• School budgets also get boosted by £420m before April next year for “extra bits of kit”.
• Sounds big, but only equates to £10,000 per primary school and £50,000 per secondary school, so more PE kit than mini bus.
• He actually budgeted more – £420 million – towards potholes and bridge repairs (facepalm).

Nothing new on pensions

• Hefty pension savers can also breathe a sigh of relief. There were mutterings the Chancellor might chop how much people could put into a pension and still get free money in tax relief, but he chickened out.
• Good thing too, as many people already withdraw their entire pension pot as soon as they can, due to lack of trust in the pensions system.
• No big bungs to savers, and no reforms to the hideously complicated range of individual savings accounts (previous rant here).
• Couple of tweaks to Premium Bonds in the pesky small print, although NS&I hasn’t made it’s mind up exactly when. You’ll be able to buy smaller amounts, down to £25 rather than £100, “by the end of March 2019”. Also, any old adult will be able to buy Premium Bonds for children under 16, not just parents or grandparents. They will still need to know the name of one of the child’s parents or guardians though 🙂 When? NS&I only says: “The date of this change will be announced in due course”.

Previous post: What is a pension and why you should care

Bung for first time buyers – but only on shared ownership

• A narrow section of first time buyers might also have reasons to be cheerful. Hammond previously abolished stamp duty for first time buyers buying property for less than £300,000. He’s hiking that up to £500,000 – but only for shared ownership housing.
• Unusually, he’s also backdating that – so if you were a first time buyer who bought a shared ownership property for between £300,000 and £500,000 since 22 November 2017, you should be in for a bit of a refund.
• The Chancellor is also keen to convert commercial properties (shops, factories) into housing, by tweaking planning rules.

More gloom for landlords

• Yet more bad news for landlords though, after previous changes to stamp duty (up) and mortgage interest relief (down).
• Cuts to letting relief, and shortening exemptions from Capital Gains Tax (CGT), could translate into higher capital gains tax bills for landlords who sell up.
• The CGT change is particularly relevant to accidental landlords, who end up letting  somewhere they used to live. After April 2020, you’ll need to crack on and sell your old pad within 9 months, rather than 18 months, to avoid getting hit by any CGT.

Too many bad jokes

• And the cause of all the toilet humour? Business rates relief offered on public loos.  Cue nudge nudge wink wink references to convenience, bogged down and not leaking. You couldn’t make it up.

Although Phil previously swore blind that he wouldn’t do another spring budget, he did threaten to “upgrade the spring statement to a full fiscal event” if needed. Translation: “I’ll do a complete U turn and have a Spring Budget if Brexit negotiations go horribly wrong”.

So if you survived this Budget summary, you might be seeing another one rather sooner than expected…

Now – over to you. Fiscal Phil reckons austerity is over, employment is up and real wages are rising. Does that bear any resemblance to reality for you? Anything else you spotted in the Budget, or are you happy to ignore the whole thing?

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