How the Budget 2018 will affect your earning, spending and saving

Income tax

Here are the upcoming tax brackets for the 2018-19 tax year:

• 20% on earnings from £11,851 to £46,350
• 40% on earnings from £46,350 to £150,000
• 45% on money earned above £150,000

Income tax bands in Scotland will be slightly different:

• 0% on earnings up to £11,850
• 19% on earnings from £11,850 to £13,850
• 20% on earnings from £13,851 to £24,000
• 21% on earnings from £24,001 to £43,430
• 41% on earnings from £43,431 to £150,000
• 46% on earnings over £150,000

Because of changes to tax brackets, millions of people should pay less in tax.

• The Personal Allowance - the amount most people can earn before they have to pay income tax - will increase to £11,850, up from £11,500
• The higher-rate 40% tax threshold will increase to £46,350
• There are no changes to the 45% top rate of tax, which will still apply to earnings above £150,000.

Here’s a brief guide to how take-home pay could change:

• If you earn £8,424 or less, there’ll be no change to how much money you take home
• If you earn between £8,424.01 and £8,632, you could make some small savings, up to £25 a year
• If you earn between £8,632.01 and £46,384, you could save around £155 a year
• If you earn between £46,384.01 and £50,024, things get slightly more complicated. You could be better off, but it depends on what you earn. The more you earn, the more you’ll save
• If you earn between £50,024.01 and £100,000, you could pay more National Insurance,  but you’ll save £566 due to the Personal Allowance and higher rate tax changes.
• If you earn between £100,000.01 and £123,700, you will pay more National Insurance and your gains from the Personal Allowance changes will be less. This is because the amount of Personal Allowance you get is gradually reduced for people earning more than £100,000.

Benefits and Universal Credit

Chancellor Philip Hammond has announced there will be £1.7 billion invested into Universal Credit –a system which merges various types of benefits, and will be rolled out in 2023.

It is a single monthly payment (or twice a month for some people in Scotland) for those who earn very little, or who are not working, and will replace individual benefits such as Housing Benefit and Jobseeker’s Allowance.

Mr Hammond also said there will be a £1,000 increase in the amount people can earn before losing benefits.  

Many benefits are currently three years into a four-year freeze by April 2019, and these have not changed. Benefits which remain frozen include Jobseeker's Allowance, Employment and Support Allowance, some types of Housing Benefit, and Child Benefit.

The National Living Wage

The National Minimum Wage and National Living Wage rates vary depending on your age. Only older workers are likely to see any benefit from the recent Budget.

The National Living Wage, which is for workers aged 25 and over, will see a payrise of 4.9% and start to receive £8.21 an hour in April.

Currently apprentices are paid a minimum wage of £3.70 an hour , under-18s get £4.20, people aged 18-20 get £5.90, those aged 21-24 get £7.38 and those 25 or over are paid £7.83.

Homeowners and Stamp Duty

First-time buyers in England who buy a shared ownership home will get the same stamp duty breaks for homes worth up to £500,000 as other first-time buyers.

This will also be backdated for anyone who has bought such a property in the last year.

Driving costs

Theresa May has already announced that fuel duty will be frozen for the ninth year in a row.

The 2018 Budget will mainly affect road maintenance and care; local councils in England will receive an extra £420m to tackle a growing number of potholes.

Drinkers and smokers

The tax which drinkers pay on beer, cider, and spirits has been frozen, although the cost of some high-strength drinks, including some white ciders, could rise.

The duty you pay on beer varies depending on its strength - weak beer comes with a rate of 8.42p for every percentage point of alcohol, which rises to 19.08p for medium-strength and 24.77p for strong beer.

It will become more expensive to smoke - tobacco duty will continue to rise by inflation, plus 2%.

Borrowing money

The Government is extending the time given to people struggling to repay debts. Previously, legal action could be taken towards debtors after six weeks – this has now been extended to 60 days.

A no-interest loan scheme to help people struggling with their finances will also be investigated. A study will take place in 2019, working out how a pilot scheme might work.

Self-employed workers

The Treasury believes a third of people claiming self-employed status are actually working in the same way as employees, and should therefore pay more income tax and national insurance.

Self-employed people working in the public sector are already paying more tax and National Insurance – the same will happen in the private sector from 2020. However, this will only be used for those working for large and medium-sized businesses.