The Budget


The Budget

What does it mean for you?

Whether it’s the Budget, a Spring Statement or Spending Review, it pays to stay on top of what the Chancellor unveils in the House of Commons. But working out what the state of public finances means for your personal finances can be tricky - and you’re not alone if you don’t understand the jargon.

We explain what the latest changes could mean for you and help you get a better view of the bigger picture with simple guides and explainers.

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Latest changes

Find out how the Chancellor’s plans for taxes, energy bills, benefits, the housing market and more could affect you.

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Money matters

The Budget’s the big one but other major Government updates impact your household budget too.

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Chancellor chat

It’s almost impossible for Chancellors to avoid financial terms when they speak. Here’s a guide to some of the most commonly used terms.

  • Your income and tax

    Your income and tax

    • A cap on the lifetime allowance for pension savings is to be removed. Previously, the most you could save in private pensions without receiving a tax charge was £1.07m – now there will be no limit to how much you save. The Lifetime Allowance charge will be removed from 6 April 2023 before the allowance itself is abolished entirely from April 2024.
    • Separately, the annual total amount you can add to your private pensions each year without a tax charge is to rise – from £40,000 to £60,000. This takes place from 6 April 2023.
    • And what’s called the ‘money purchase annual allowance’ is also changing. This affects those who are already drawing down money from a defined contribution pension but who want to keep on saving more for the future. The allowance was £4,000 a year into a pension before a tax charge. From 6 April 2023, this will rise to £10,000.

    The changes below were all announced by the Chancellor in the Autumn Statement 2022:

    • From 1 April 2023, the National Living Wage (NLW) is to rise by 9.7% to £10.42 an hour (for those aged 23 and over). It represents an increase of more than £1,600 to annual earnings if you’re a full-time worker on the NLW, figures in the Autumn Statement said.
    • An extended freeze on income tax thresholds at which you become a basic-rate (20%) or higher-rate (40%) earner was unveiled. It will now last two years longer than planned, to 2028. Because these thresholds won’t move in line with inflation, pay rises that take you into a higher tax bracket will apply sooner. Known as fiscal drag, it will see millions of workers pay more tax. This applies to those in England, Northern Ireland and Wales. In Scotland, separate income tax rates and thresholds apply.
    • For the highest earners, the income threshold at which the top rate of tax (45%) applies will fall in April 2023 – from £150,000 to £125,140. If you already earn more than £150,000, you face paying an extra £1,243 a year. Tax rates and thresholds in Scotland are subject to the 2023-24 Scottish Budget published on 15 December 2022.
    • Inheritance tax (IHT) and National Insurance (NI) rates were kept the same. IHT gives you a tax-free allowance of £325,000 (above which you pay 40%). It has been at this rate for over a decade and is now set to stay until April 2028. New NI rates – which began on 6 November 2022 after a policy reversal – were also frozen until 2028.

    National Living Wage to rise by 9.7% to £10.42/hr

  • Your home

    Your home

    The changes below were all announced by the Chancellor in the Autumn Statement 2022:

    • Saving to buy a home? You face a new deadline to avoid higher stamp duty bills. In September 2022, the Government originally doubled the threshold at which homebuyers start paying stamp duty from £125,000 to £250,000. For first-time buyers, it had been lifted from £300,000 to £425,000. These limits will only remain until 31 March 2025, so make sure you factor this into how you plan to save for your deposit.
    • If you’re a homeowner on universal credit and struggling to meet mortgage payments – e.g. having lost a job - it could now be easier to ask for Government help repaying your mortgage interest. To qualify for the Support for Mortgage Interest (SMI) scheme you would usually have to be claiming universal credit for at least nine months before applying. From spring 2023, this wait will be reduced to three months instead. SMI is a loan, so must eventually be repaid (usually when you sell your home in the future).
    • If you’re a tenant in social housing, the cap for rent increases between April 2023/24 has been lowered from 11.1% to 7%. 

    Higher stamp duty from March 2025

  • Your benefits

    Your benefits

    • If you receive universal credit and have childcare costs, the maximum you can claim from the Government towards these will rise in summer 2023. If you have one child, the maximum amount paid monthly rises from £646 to £951. For two children, it’ll go up from £1,108 to £1,630. Each amount will then increase in line with CPI each year until 2027/28. In another change, the money will be paid upfront to eligible parents rather than needing to be claimed back.

    The changes below were all announced by the Chancellor in the Autumn Statement 2022:

    • If you receive the state pension, it’ll rise 10.1% from April 2023 in line with inflation under the ‘triple lock’. So if you qualify for the full ‘new’ state pension, your weekly income will increase from £185.15 to £203.85. And if you’re on the full ‘basic’ state pension (for those who reached pension age before April 2016), you’ll see your income rise from £141.85 to £156.20 a week. The standard minimum income in Pension credit will go up by 10.1% too.
    • If you’re eligible for other state benefits, most of these will also increase by 10.1% in April 2023. These include the working tax credit, personal independence payment, child benefit and universal credit.
    • The overall benefit cap – the total allowed - will also rise by 10.1% from next April. It will be lifted from £20,000 to £22,020 for families nationwide, and from £23,000 to £25,323 for families in Greater London. You can find more on the Government’s Moneyhelper website.

    ‘Triple-locked’ state pension to rise by 10.1%

  • Your spending and bills

    Your spending and bills

    • The Energy Price Guarantee, which means energy bills of £2,500 a year for a typical household, has been extended by three months. It will be kept in place until the end of June 2023, instead of ending in March.
    • If you use a prepayment meter for your energy bills, you’re set to save £45 a year after the Chancellor said the premium for paying by meter would end. Meter payment charges will now be comparable to those who pay by direct debit. The change takes place on 1 July 2023. 
    • Working parents of two-year-olds will be able to apply for 15 hours of free childcare a week from April 2024. Later in the same year, in September, those with children aged nine months to two years will also be eligible. Then, from September 2025, the number of hours of free care is set to double to 30 hours for all eligible parents with children aged under five. The benefit is available for 38 weeks of the year. Parents of three and four-year olds can currently apply for up to 30 hours of free care.

    The changes below were all announced by the Chancellor in the Autumn Statement 2022:

    • To help the most vulnerable with their energy bills, the Chancellor announced more targeted Cost of Living payments. Between April 2023 and April 2024, those on disability benefits will receive an extra £150; pensioner households an extra £300; and households on means-tested benefits an extra £900.
    • Council tax bills in England could rise by up to 4.99% from April 2023 – higher than previously allowed. The current cap is 2.99%, and any attempt to raise bills by more than this would have triggered a referendum by your local authority. A new higher 4.99% limit could make it easier for councils to increase bills.
    • If you own an electric car, van or motorbike, you’re set to pay Vehicle Excise Duty from 1 April 2025. New electric cars registered from then will pay a ‘first year’ rate £10 for an initial 12 months, then the standard rate (currently £165) after that. Zero emission cars registered between 1 April 2017 and 31 March 2025 will also pay the standard rate.

    Energy price guarantee stays at £2,500

  • Your investments

    Your investments

    The changes below were all announced by the Chancellor in the Autumn Statement 2022:

    • A cut in allowances for capital gains and dividends could leave you facing a higher tax bill on your investments or income.
    • The amount you can earn from dividends –payments from shares held in companies - without paying tax will fall from £2,000 to £1,000 in April 2023, and then halve to £500 a year later. This could affect investors who receive dividend income from shares and funds, and small business owners who pay themselves in dividends.
    • Separately, the annual capital gains tax (CGT) exemption is also set to fall, from £12,300 to £6,000 in April 2023 - and then halving to £3,000 in April 2024. CGT is paid on any ‘gain’ in price when you sell assets chargeable to CGT such as a second home or investments held outside an ISA.

    Investors’ allowances cut

The Budget

Usually held once a year in the spring or autumn, the Chancellor outlines plans for the nation’s finances – and what it means for your money.

Some years can see more than one Budget – e.g. after an election, a change of Government or drastic economic circumstances. 

Spring (or Autumn) Statement

Although historically seen as having less impact on household finances than a Budget, it’s still considered to be a major seasonal update on the Government’s finances.

Think of it as a check-in, months after a Budget, to let the country know how it’s all going.  

Spending Review

These tend to take place every two to four years and set out what the Government expects to spend on public services (and where) over the next few years. 

Other announcements

Governments typically aim to deliver one Budget and seasonal statement a year. But major events – both political and economic – can put pressure on Chancellors to deliver extra financial updates. Previous examples include the mini-Budget in September 2022.

What does the financial language mean?

As custodian of the nation’s purse strings, it’s almost impossible for any Chancellor to avoid using lots of financial terms when they speak.

You’ll often hear the same words and phrases over and over again, and if you’re unsure of their meaning, it’s easy to lose track.

Here’s a guide to some of the most commonly used terms.

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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