The budget could potentially affect the finances of millions of UK citizens, so whether you’re a first-time buyer, landlord, overseas investor or just interested in what the 2020 budget means, take a look at this short guide which highlights the need-to-know points.
Is the National Minimum Wage going up?
Yes the UK government announced in their 2020 budget statement that an increase to minimum wage would come into effect in April.
Workers over 25 are set to be paid an extra 6.2% per hour, from £8.21 to £8.72
A full time worker could see an annual pay increase of £930
Is the minimum wage going up in April for younger people too?
Younger workers who are paid less, will also see an increase between 4.6% and 6.5% depending on their age category.
21-24 year-olds will see a 6.5% increase from £7.70 to £8.20 an hour
18 to 20-year-olds will see a 4.9% increase from £6.15 to £6.45 an hour
16 to 17 year olds will see a 4.6% increase from £4.35 to £4.55 an hour
Those on apprenticeship schemes will see an increase of 6.4% from £3.90 to £4.15 an hour
How will a change to minimum wage affect me?
Earning more money per hour could help many first-time buyers save a deposit quicker. That being said, the Bank of England's decision to cut interest rates could hinder the savings potential for many.
Is the National Insurance threshold going up?
The chancellor’s statement revealed that both employees and the self-employed will be able to earn £9,500 a year before they have to pay National Insurance.
The current threshold is £8,632 but as of April, 2020, it will rise almost £900, meaning
workers earning more than £12,600 a year could benefit from an annual saving of £100.
Has income tax been frozen?
The income tax allowance is the amount you can earn before you start to pay 20% income tax. The budget announcement brought the news that the threshold remains frozen at £12,500.
Higher earners may be pleased to know that the £50,000 threshold at which people start to pay the higher 40% rate of income tax, is also frozen for another year.
Will the 2020 budget help first time buyers?
Although the Conservative manifesto outlined a strategy to help renters become homeowners, the 2020 budget announcement failed to mention further details about the First Homes’ scheme which would allow qualifying and local first-time buyers to get 30% discounts on property.
An increase of long-term 30 year mortgages with 5% deposits was also mentioned in the manifesto but not in the budget.
Has there been a change to Stamp Duty for first time buyers?
No Stamp Duty legislation has not changed for first-time buyers who can still benefit from paying no Stamp Duty tax on their first property, if it’s value is under £300,000.
Has Stamp Duty increased for overseas investors?
Yes a 2% increase on Stamp Duty will be introduced in 2021 for overseas investors purchasing property in the UK. This could discourage foreign property investment, presenting an opportunity for buy-to-let landlords in the UK as well as first-time buyers.
Will I be better off after the budget announcement?
A £5bn fund for the NHS, an increase to National Minimum Wage and a steady freeze on fuel duty for at least another year could bring a positive financial gain, even if minor for most.
Whether or not you will be better off depends on your own financial situation and circumstances and if you have concerns about whether the budget could affect your ability to save or get a mortgage, ask for an expert’s opinion.