This Wednesday 30th October, the Labour government will reveal their first budget in over a decade. They have said that they need to make some tough choices to plug the hole in public finances. So, we take a look at what might be in the budget and how it could affect your wallet.
The budget is a statement made by the Chancellor that sets out the UK government’s tax and spending plans for the year ahead. This includes spending on public services like healthcare, education, and emergency services.
Most plans are being kept under wraps, but some have already been made public, such as:
Tax breaks on private schools are due to come to an end. This should help to fund state schools that 90% of children attend.
The Winter Fuel Payment (or Winter Fuel Allowance) is an annual tax-free lump sum of up to £300 paid to older people, to help with the cost of energy bills.
Previously, everyone born in England and Wales before 25th September 1957 qualified for this payment. But from winter 2024, only people who get Pension Credit or certain other means-tested benefits will be eligible.
So, if you are of state pension age, it’s worth checking your eligibility for Pension Credit. The Department for Work and Pensions estimates that around 880,000 people qualify for it, but don't claim.
To the relief of many pensioners, the state pension ‘triple lock’ is expected to stay. It guarantees that the state pension increases each April by whichever is highest:
1. Inflation - the increase in prices, measured by the Consumer Prices Index (CPI)
2. Average wage increases
3. Or 2.5%
While we don’t have all the details yet, here are some predictions that have been doing the rounds:
The government says that they won’t increase the income tax and National Insurance thresholds for employees. But there is speculation that they might raise the National Insurance contributions that employers make.
Fuel Duty is a tax that is included in the price you pay to fill up your car or heat your home. It has been frozen since 2012. If it's unfrozen, the price of petrol could cost an extra 10 pence per litre.
Stamp Duty is a tax that is charged when you buy a house over a certain value.
In 2022, the nil-rate tax threshold was increased from £125,000 to £250,000, and the threshold for first-time buyers went up from £300,000 to £425,000.
This made buying a house cheaper, but it’s only a temporary measure that lasts until 31st March 2025. Labour haven’t said they will extend it.
At the moment, Inheritance Tax is charged at a rate of 40% on anything over the £325,000 threshold. Only 4% of people in the UK pay Inheritance Tax, but this may rise if the criteria changes.
With the potential changes to benefits and taxes, it's understandable to feel uncertain about the future, but we’re always here to help.
Check out our blog for insightful money management tips, including what help is available for paying energy bills, and how to budget in 6 simple steps.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.
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