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Budget 2018

What it means for you

Read more about what’s been announced in the Budget 2018 and how it may affect you – and your money.

Depending on the outcome of Brexit negotiations, the Chancellor has warned that a full Budget announcement could be required next spring, when new measures or changes to existing rules may be introduced.

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  • Income tax changes

    New allowances to put more money in your pocket

    The Chancellor will raise the personal allowance – the amount you can earn without paying a penny of tax – to £12,500 in April 2019.

    At the moment, the 20% tax band – the so-called ‘basic rate’ – begins on earnings above £11,850. When it rises to £12,500 next April, basic rate tax payers will be £130 a year better off. This is because they can earn another £650 without having to pay tax at 20%.

    On top of this, the point at which you pay 40% tax – the so-called ‘higher rate’ – will go up. In April, it will jump from £46,350 to £50,000. So, if you earn £50,000, the extra £3,650 will be taxed at 20% instead of 40% – that’s £730 less tax to pay. Added to the £130 personal allowance gain, it works out as a £860 boost.

    However, the actual tax savings you make will vary according to your income and how you may be affected by National Insurance changes. Different income tax bands may apply to your income if you live in Scotland.

    The Chancellor also announced the National Living Wage (the minimum amount those aged 25 and over can earn) is also to rise next April, from £7.83 to £8.21 an hour.

  • First-time buyers

    No stamp duty on shared ownership homes up to £500,000

    The Chancellor also announced an extension of first-time buyers’ stamp duty relief to so-called ‘shared ownership’ properties worth up to £500,000 in England and Northern Ireland. In welcome news for those who bought eligible properties since the last Budget in November 2017, the relief will be backdated so recent buyers can claim a refund.

  • Universal credit update

    Universal credit

    Changes were made to universal credit, which brings together a number of benefits for people of working age into one payment.

    Recent reports have highlighted how some people have run up debts and rent arrears while waiting for the benefit to be paid. To help ease this situation, the Chancellor announced more cash to fund top-up payments.

    He also revealed changes to help struggling families and individuals who are eligible for a work allowance.

    From April 2019, those affected will be able to earn an extra £1,000 a year before their universal credit begins to be withdrawn. This means some 2.4 million households will keep an extra £630 income each year, the Chancellor said.

  • Help to Buy

    Extension to Help to Buy scheme

    The Help to Buy scheme will be extended from 2021 for another two years and will end in 2023. Under Help to Buy, first-time buyers and existing homeowners can apply for an equity loan to help with the purchase of a new property worth up to £600,000.

    From 2021, it will only apply for first-time buyers and regional price caps will be introduced that vary nationwide. They will be capped at 1.5 times the predicted average first-time buyer price in each region – with a maximum of £600,000 in London.

    This scheme is only available in England, although the Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes. Find out more about the Help to Buy options here.

  • Travel

    Car and train travel

    In a motorist-friendly move, fuel duty will be frozen for the ninth year in a row. The near decade-long freeze on the tax added to fuel prices has saved the average car driver more than £1,000 since 2010, Mr Hammond added. And to address concerns about crumbling roads, he revealed a £420m fund for local authorities to repair potholes.

    Train travel boost

    The so-called ‘millennial’ railcard for 26-30-year-olds will be rolled out nationwide by the end of 2018.

    By extending the existing 16-25 Railcard to include anyone up to the age of 30, it would bring up to 4.4m more people into the scheme, according to the government. For an annual charge of £30, the railcard offers a 33% discount on rail travel at non-peak times.

Barclays does not provide financial, legal or tax advice. Accordingly, nothing contained within this article should be construed as constituting legal, financial or tax advice. Tax rules and legislation can change and the benefits and drawbacks of a particular tax treatment will vary with individual circumstances. We recommend that you take professional advice where required. You have sole responsibility for the management of your respective tax, financial and legal affairs, including making any applicable filings and payments and complying with any applicable laws and regulations.

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