It was a two part doozy ( (find the full thing here), the first tackling the global COVID-19 crisis and the second looking ahead. It was a packed budget with lots of cash, tax breaks, handouts. There was much to like or dislike, depending on your politics. There was no talk of tax increases but the money has to come from somewhere so likely the government is going to have to borrow!
Here are some highlights we believe you will find the most relevant:
📉 Interest Rates
What: The Bank of England has cut interest rates as an emergency measure to protect the economy against the coronavirus outbreak from 0.75% to an historic low of 0.25% – a rate note since August 2016 and November 2017.
Winners: The fall in the base rate could be good news if you are carrying debt (variable mortgage rates may come down, as might other loans). It also opens up affordable credit for small businesses and individuals suffering from the impact coronavirus is having on the economy.
Losers: A fall in rates is bad for savers, who are already getting a bad return on any savings.
Neutrals: Those with a student loan will see no difference in the interest on their debt as student loans are tied into the Retail Price Index and not the bank rate (we again call on the government to review this!)
🤧 COVD 19
What: Bank of England’s Mark Carney stated that the economic shock caused by coronavirus “could prove large and sharp but should be temporary” and it’s why interest rates have been suddenly chopped. The virus, and the economic support required, is the first topic raised by the chancellor as he kicks off his first budget highlighting concerns over both supply and demand side of the economy unveiling a £30bn stimulus to counter UK coronavirus shock.
Learn more: government information here
👵 National Insurance thresholds
What: National insurance threshold to be increased to £9,500 (up from the current threshold of £8,632) representing a tax cut for 31 million people the IFS estimated that the change would benefit people by £85 a year. All other announced changes were for top earners – little change to everyone else.
Learn more: Pensions 101 pathway
🌴 The environment
What: There is an argument to be made that this is a green budget. Major pushes for a plastic packaging tax so firms will face higher taxes if they use packaging high in non-recyclable plastics. Carbon capture storage clusters being built, investment on new electric vehicles infrastructure and charging points, as part of a package for green transport.
Learn more: Ethical Investments pathway
⚖️ Tampon tax
What: The 5% levy on women’s sanitary products has long been controversial and the chancellor has announced he will abolish this from 1 January 2021. Getting your period is about to get a little cheaper so maybe set aside the money you saved and create an emergency fund – a good opportunity to review your spending.
Learn more: Budgeting pathway