The future scenarios for the UK economy were outlined last Monday when Phillip Hammond delivered his Autumn Budget. But what does it mean for people?
Below are some key points in regards to the Chancellor speech.
The personal income tax-free threshold is set to increase at £12,500 from £11,850 and the higher rate of tax threshold from £46,350 to £50,000 next year. This budget measure anticipated the Conservative Manifesto pledges by 1 year that these rates are increased to 12,500 and 50,000 respectively. From next year, the two rates will rise in line with inflation levels. That means that even if people earn more, they will not automatically be dragged into a higher tax band.
Furthermore, the reduction of the corporate tax rate has been confirmed to 17% from 2020 and the VAT threshold for small business is set to remain at £85,000 for other two years.
Mr Hammonds has also confirmed the Universal Credits to play a big role in the UK economy. In fact, transition measures will be introduced over the next 5 years, but no details have been released as yet.
Universal Credit is a new government benefit that consists of a single monthly payment for people on a low income or without work. It replaces some of the benefits and tax credits that are seen today, such as Child Benefits and Jobseeker’s Allowance.
This is a hugely complicated welfare reform, probably affecting millions of citizens in different ways in the next future.
Nevertheless, Mr Hammond announced that work allowances would be increased when the rollout of Universal Credit is concluded. The allowance is the amount somebody can earn before their benefit payment is affected.
Many working-age benefits are three years through a four-year freeze by April, and this is unchanged. These include Jobseeker’s Allowance, Employment and Support Allowance, some types of Housing Benefit, and Child Benefit.
Another news comes from Britain’s minimum wage: from April 2019 workers will receive an inflation-busting pay rise, with the hourly rate increases to £8.21 from its current £7.83. Nevertheless, plans to raise the rate for the over-25s to £9 an hour by 2020 has been re-routed for Brexit reasons.
First-time buyers in England who buy a shared ownership home will get the same stamp duty breaks for homes of up to £500,000 as other first-time buyers who received the concession in the last Budget. This will also be backdated for anyone who has bought such a property in the last year.
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