What is the Budget?

A speech. The Budget is an annual speech the Chancellor, Philip Hammond makes to the House of Commons outlining their plans for spending and taxation in the year ahead. Whatever the Chancellor pulls out of the famous red box can have real impacts to the cash in your pocket. After his speech to the house the budget is debated by MP’s, the first response is reserved for Labour leader Jeremy Corbyn- don’t expect him to be full of praise.

 

What are some of the key areas the Chancellor might focus on in the budget?

Benefits. To live up to previous pledges £7 billion more in cuts need to be made. But this would be controversial. Flagship universal credit is in trouble, as it has been claimed it is leaving many people out of pocket. This combined with the freeze in the amounts payed out to each claimant, makes it a hot topic.

Minimum wage. The government has committed to a steady rise in for the legal minimum that can be paid to employees. Expect the Chancellor to announce the next rise. Giving a pay rise to some of the lowest paid workers.

Personal tax allowance. This is the amount any worker can earn before the government deducts tax from your pay packet. This rising of the threshold has been a key Tory pledge, helping millions of workers. Although there has been speculation that in order to get in more money, these rises may be delayed.

‘Amazon Tax’. A lot of people have been calling for online retailers to pay more in tax, as they pay a fraction the amount high street shops do. It isn’t expected to emerge this budget, as it is complicated. Though as with any budget there might be surprises, so we could at least see a consultation launched.

 

Will there be a spending spree?

Probably not. Prime Minster Theresa May already announced in her conference speech a giveaway of sorts, a freeze in fuel duty- something that was expected to rise. The NHS has already had £20 billion more promised in the coming years. Any major tax of spending giveaways would require tax to be raised in other areas.

Will tax rise?

In some places. It is expected that property buyers who don’t live in the UK will have to pay a 3% higher rate of stamp duty when they buy a home. Not only will this raise money but it could help cool the growing property market, as rich overseas investors buying UK homes drive up house prices.

VAT may be imposed on to private school fees, although this could be unpopular with MP’s and the public.

Insurance premium tax which all of us pay when we take out insurance may rise, it stands at 12%, and it has proved a favourite for taxes rises, having increased three times since 2015. It could hurt millions of people, making car and home insurance more expensive.

 

Is the budget overshadowed by Brexit?  

Partly. The public purse strings are already having to be loosened to create a pot of money for costs relating to Brexit. In addition to this, Brexit looming is causing a decline in economic confidence, denting economic growth. Less growth means there is less new money going to the Treasury. Less money, less spending.