Earlier this week, the Chancellor Philip Hammond announced the UK’s budget for the upcoming years against Brexit turmoil and other uncertainty. However, Hammond has announced the end of austerity with some new plans which include interest free loans, less stamp duty and a noticeable tax cut.
The basic rate tax has received an additional boost from its earlier rise to £11,850 in April and will not be a minimum of £12,500. This will act as a huge benefit to low income earners, putting an extra £650 tax free in their pockets. At the higher end of the spectrum, the higher tax bracket will go up from £46,350 to £50,000 which is a tax cut of around 5%. The downside is that those who were paying a higher tax bracket previously will now have their pension taxed at 40% compared to previously being 20%.
A huge gesture has been made to first time buyers of shared-ownership homes worth up to £500,000 – with no stamp duty charged and this will also apply to those who bought a house since the last Budget. This will give first time buyers a saving of up to £10,000 depending on whether they are in the UK or Scotland.
Hammond has also raised the introduction of ‘interest free loans’ to help borrowers who are suffering long-term debt due to high cost credit cards and payday loans. With around 3 million people in this position, the scheme has been successful in Australia and helped 4 out of 5 people that applied get out of debt. The conditions of this scheme are yet to be confirmed but will likely be at a consumer level and will not affect those companies using business loans, bridging loans or other commercial finance.
The idea of interest free loans has been applauded by Money Saving Expert figure Martin Lewis and MP Stella Creasy who has long campaigned about the detriment of high cost loans. The Chancellor has been warned about making similar errors that occurred when the government offered Universal Credit, which only worsened consumer debt by giving them access to finance beyond their means.
Other positive additions from the Budget include a plan to offer tax relief to high street stores and include facilities to improve footfall. Elsewhere, tech companies coming from outside of the UK will be prone to paying higher tax, providing that they are earning more than £500m globally.
£500m is also being made available for the Housing Infrastructure Fund, under £30 billion would be used to upgrade the UK’s roads and a further £650m of grant funding for social care for English authorities.