Spring Budget 2020
Spring Budget 2020
What does it mean for you?
From support for those affected by coronavirus to National Insurance contributions changes and a fuel duty freeze, the government’s latest spending plans are out.
Wages and taxes
A little extra in your pay packet
From 6 April 2020, the government is raising the threshold for paying National Insurance contributions from £8,632 to £9,500. If you work full time, you could save an average of £104 a year, and if you’re self-employed, you could save £78 a year.
The government also said it aims to extend the National Living Wage (NLW) to workers aged 21 and over by 2024. Currently, you have to be aged 25 and over. The NLW is already being increased by 6.2% to £8.72 this April.
No changes to income taxes were announced. Currently, if you live in England and Northern Ireland, your annual income is tax-free up to £12,500.
There were no changes to the saving limit on adult Individual Savings Accounts (ISAs), so this remains at £20,000. However, the annual limit for Junior ISAs and Child Trust Funds is increasing from £4,368 to £9,000.
Thinking about opening a savings account for your child? Read tips for finding the right account.
Cost of living
The impact on your day-to-day spending
To help bring down the cost of living for UK households, the government has made a few key announcements around duties and taxes on everyday items.
For instance, fuel duty is being frozen for the tenth year in a row. Currently, it’s set at 57.95p per litre, with 20% VAT added. It’s also freezing all duties on alcohol – in fact, your next pint of beer could be 1p cheaper than it would have been if it had risen with inflation.
Nicholas Lyes, head of policy at the RAC, said: “We welcome the Chancellor’s freeze in fuel duty which will be a relief to drivers up and down the country.”2
From January 2021 there’ll be no VAT applied to sanitary products, and no VAT on digital publications such as e-books, e-magazines and e-journals from December 2020.
Meanwhile, Tax-Free Childcare will become more accessible to parents of up to 500,000 school-aged children. This is a result of service improvements that are designed to make the scheme compatible with school payment agents.
Under the government’s current Tax-Free Childcare scheme, you can receive up to £2,000 a year for each of your children.
If you’ve got children, read our guide to cutting household bills and reducing the cost of childcare.
More funding for affordable, safe housing
Affordable housing is to get a boost, with the Chancellor announcing that the Affordable Homes Programme will receive an additional £9.5 billion. That brings the government’s total investment in the initiative to £12.2bn.
There’ll also be a £10.9bn increase in housing investment as a whole, with an average of 300,000 homes to be built each year until the mid-2020s.
As part of the government’s commitment to end rough sleeping, the Chancellor has unveiled a £643m fund to provide accommodation and support for those without a permanent place to live.
Other funding has been allocated following the 2017 Grenfell fire to improve the safety of residential properties. The Chancellor pledged an additional £1bn towards removing unsafe cladding from buildings taller than 18 metres.
Melanie Leech, chief executive of the British Property Federation, said: “It is great to see the government prioritising the remediation of high rise residential buildings.”3
Winter flooding has affected homeowners up and down the UK. To ease the burden in future, the government is increasing investment in flood and coastal defence, including £5.2bn on flood defences in England. This incorporates better protection for 336,000 homes.
Meanwhile, a 2% stamp duty surcharge is being rolled out for non-UK buyers. For all other buyers, however, stamp duty will remain the same.
As it stands, first-time buyers in England and Northern Ireland do not pay stamp duty on the first £300,000 of a property’s value, on properties worth up to £500,000. Home buyers pay a different tax if property or land is in Scotland or Wales.
Saving to buy your first home? Find out more about ways to get on the ladder in our first-time buyers’ guides.
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.