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What the budget means for you

Chancellor of the Exchequer Jeremy Hunt leaves 11 Downing Street, London, with his ministerial box before delivering his Budget in the Houses of Parliament. Picture date: Wednesday March 6, 2024. (Photo by James Manning/PA Images via Getty Images)
Chancellor Jeremy Hunt leaves 11 Downing Street with his ministerial box before delivering the spring budget in the Houses of Parliament. (James Manning - PA Images via Getty Images)

When the chancellor stands up to give his budget speech it can all feel like a bit of a word salad – dressed with a generous dollop of pointless shouting. The combination of a government keen to capitalise on any political upside, and a smorgasbord of different policies makes it difficult to work out what it means for your finances. It essentially boils down a few key changes.

National Insurance cut could save you £754, but it’s not quite what it seems

Any tax cut will help ease the burden, and the 2p national insurance cut will make a real difference to how much working people have in their pockets. The more you earn, the more you save, so while a higher rate taxpayer will save £754, someone on a salary of £30,000 will save £349 a year – or £29 a month.

However, this comes alongside the notorious freeze in the personal allowance and the higher rate tax threshold, which means more people paying higher rates of tax. When you factor them both in, higher earners are still better off, but those earning less than £19,000 will actually be worse off than before all these changes. Meanwhile pensioners, who gain nothing from these cuts, will also be counting the cost.

There’s a fairer deal on child benefit for singles and those caught by fiscal drag

The child benefit rules that penalise single parents have always been incredibly unfair, because a couple could both earn £50,000 and keep all their benefit, but a single person would start losing it from the day they earned £50,099, so the decision to move to a household basis further down the line is a welcome change.

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Read more: What has been announced in the spring budget?

In the interim, from this April the threshold will be raised from £50,000 to £60,000 and the top level of withdrawal to £80,000. After a decade of being rooted to the spot, this will be welcome, but there was scope for a bigger rise. If it had risen with average wages since it was introduced in January 2013, it would be £71,774.

Your vices will cost you dear

Alcohol duty has been frozen to Feb 2025, protecting drinkers from a rise of 3%, but tobacco duty will rise with inflation. There will also be a consultation on a tax on vapes, to be introduced in October 2026, at which point there will a one-off rise in tobacco tax, so there’s an incentive to stop smoking and switch to vapes.

There’s relief for motorists as fuel duty is frozen

Fuel duty hasn’t risen with inflation since 2011, so a freeze is usually nailed as soon as the maths behind the autumn statement emerges. This time a 13% rise has been hanging in the balance, because Hunt didn’t commit to it in the autumn statement, so it’s a huge relief for motorists that duty has been frozen and the 5p per litre discount has been extended for another year. It’s expected to avoid a £50 rise in costs for drivers over the next year.

Read more: What the budget means for your pension

There’s a mixed bag for savers and investors

The decision to plough ahead with the halving of the capital gains tax and dividend tax is disappointing. They will fall to a miserly £3,000 and £500 respectively, so it’s hard for investors to plan tax-efficient income and gains outside an ISA or pension.

Hunt announced a consultation into a British ISA, and confirmed the NatWest share sale will go ahead in the summer. He also gave us the surprise of a British Savings Bond from NS&I, which will offer a guaranteed savings rate over three years. All eyes will be on the rate available, because even savers who want to buy British with their cash will not want to accept a disappointing rate in return.

The amount of money NS&I needs to raise next year has been raised to £9bn. However, given that it raised more than this in the last tax year, and given the backdrop of expectations that the Bank of England will start cutting rates in the coming months, it means the next moves for savings rates and the premium bond prize fund are likely to be cuts.

Watch: Hunt: Fuel duty freeze extended for 12 months

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