We were getting cheaper travel by splitting train tickets for last week's Finance Fridays. This week we are looking at how the recent Budget may affect us.
On Wednesday we saw the last main Budget that is to be announced in March. The main Budget will in future be made in November therefore replacing the Autumn Statement. So this year there will be two Budgets but this was the first for Philip Hammond in his capacity as Chancellor of the Exchequer. As always the Budget statement was a mixture of allowances that have already been announced as they will come into force from next month and some surprise new measures. Let's look at some of the main points of the Budget and what they mean for us.
National Insurance Contributions (NIC) – This was the biggest and most controversial announcement. Self employed National Insurance Contributions known as Class 4 will increase from April 2018 to 10% and another 1% to 11% from April 2019. This is to try and bring them in line with Class 1 contributions made by employees. As previously announced Class 2 NIC will be abolished from next year.
Tax-free dividend allowance - This is to be reduced from £5,000 to £2,000 from April 2018. This decision has been based on the fact that the higher rate benefits mainly director shareholders or wealthy savers with share portfolios worth more than £50,000.
New savings bond interest rate announced – A new National Savings and Investment bond will be available from April paying 2.2%. This will be for savings up to £3,000. This is actually quite a good savings rate if you see how low the interest rates are the high street banks and building societies are currently offering.
Income Tax - The personal allowance will rise for the seventh year in a row to £11,500 from £11,000. The higher rate tax band of 40% will start on earnings above £45,000 from April 2017.
National Living Wage - This will rise to £7.50 from £7.20 from April 2017 for workers aged 25 years and over. The National Minimum Wage, which is applicable for workers aged 24 and under, will also rise in each age category from April.
Tobacco, alcohol and other drinks - Although there will be no increase to the duties levied on alcohol and tobacco this time a new minimum excise duty will be introduced on cigarettes based on a pack price of £7.35. There will also be the introduction of the so-called Sugar Tax. A soft drinks levy is to be imposed at 18p and 24p per litre for the main and higher bands.
Help for pubs - It's well-known that pubs have been closing at an alarming rate for years. These closures usually affect small communities. Therefore pubs with a rateable value of £100,000 or less will see a discount of £1,000 on business rates. This is supposed to take in 90% of all pubs.
What did you think of this Budget? Does it affect you much?
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