Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Consumers who are anxious about how any of the changes announced today could impact them financially would be wise to seek independent advice to work out whether they are better or worse off.”
Hard-pressed savers
“The Budget overlooked an opportunity to support hard-pressed savers who may now end up in a higher rate tax-bracket, subsequently halving their Personal Savings Allowance (PSA). The income tax freeze will continue until 2028, so savers still have years to endure no increase to income tax thresholds. Savings interest rates have been coming down recently and those earning little to nothing on their hard-earned savings must shake apathy and switch their pots. Around £252bn is sitting in UK current or savings accounts earning no interest, according to the Bank of England. This money is slowly deteriorating from inflation, an unnecessary loss. There are many top savings accounts which beat the relentless eroding prowess of inflation, but it’s down to savers to move their money. Consumers must proactively review their pots and brace for impact of any further cuts to the Bank of England base rate before the year is over.”
Investment in the UK
“There needs to be more action to encourage UK investment, but the reality is that many consumers will not have the confidence or knowledge to dip their toe into the stock market. One area of the market which could be a good starting point for savers would be a stocks and shares ISA, as any allocated fund sectors can be set to marry up with someone’s attitude to risk. As a rule of thumb, investing over the longer term is preferable, but investors should know that past performance is never guaranteed to be reflected in future returns. It’s always wise to seek expert advice to adopt a new risk profile.”
Affordable Homes Programme
“The Chancellor has confirmed more investment in housing supply, with a top-up of £500m into the Affordable Homes Programme. Ramping up the supply of affordable housing is a daunting task, but it must be addressed to support those who desperately need a place to call home. The review into Right to Buy (RTB) is to ensure there is enough stock of social housing built to replace sold properties, and there will also be a consultation on caps to rent on social housing. These measures are not a quick fix but are an attempt to slowly re-build a housing system which is broken.”
Stamp Duty
“Those borrowers looking to buy a second home will see an increase from 3% to 5% from tomorrow. Those looking to buy a home may also be disappointed to see the thresholds at which borrowers start paying Stamp Duty Land Tax (SDLT) have not been raised, and that the temporary discount will revert at the end of March 2025. This reaffirms a window of opportunity for buyers as the nil-rate tax threshold up to £250,000 will drop to £125,000 and the First-Time Buyer’s Relief nil-rate tax threshold of up to £425,000 will drop back down to £300,000. These reliefs were destined to end and have been in place for over two years, but it poses yet another challenge for would-be buyers who are struggling to find an affordable home and feel their dream of homeownership is way out of reach.”
Lifetime ISA ‘missed opportunity’
“The chance to adjust Lifetime ISAs has sadly been overlooked, a missed opportunity to support first-time buyers. Despite rising house prices which demand higher deposits, the £4,000 LISA allowance has not been increased, nor has the upper limit on the property value threshold of £450,000. Those savers who therefore become ineligible through no fault of their own will have little option but to pull out their savings, incurring a penalty of 25%. It is disappointing that there are no plans to temporarily waive this charge, particularly as first-time buyers have a few months until the First Time Buyer’s Relief threshold reverts to where it was in 2022. Those considering a Lifetime ISA would be wise to check the full terms and conditions before they enter any arrangement to ensure they are eligible for the 25% Government bonus. If savers have any concerns, they may want to consider alternative savings accounts where they can move their money freely, but they will forego the Government boost that a LISA offers.”
Income tax thresholds freeze will end from 2028
“The anticipated ongoing freeze on income tax thresholds has not come to be, so this decision will slow down the rise of taxpayers falling into a higher tax bracket. This may still frustrate those looking for a more immediate change, particularly at a time when wages have been rising to cope with the substantial uplift to the cost of living. As inflation can influence wage rises, some may now end up in another tax bracket, so seeking advice on how this will impact their financial wealth is essential.”
National Living Wage and National Minimum Wage increases next year
“Consumers on the National Living Wage may be pleased to see a rise confirmed for the next tax-year, which will benefit more than three million workers. The increase is an inflation-busting 6.7%, worth £1,400 a year for a full-time worker, and Labour plans to work on closing the gap with 18- to 20-year-olds, seeing their largest increase on record, worth £2,500 a year. These hikes are good news for those struggling with the cost of living, but could concern small businesses who may have to consider hiking prices.”
National Insurance to rise to 15% for employers
“As widely anticipated, National Insurance contributions by employers will increase, up from 13.8% to 15%. However, the threshold at which businesses start paying National Insurance on a worker’s earnings dropping from £9,100 to £5,000 is likely to cause a stir with businesses. These changes could make them re-think their auto-enrolment policies and could hit employees’ wealth over the longer-term, but salary sacrifice schemes may become more attractive. The Chancellor has estimated these changes will raise £25bn.”
Buy-to-let market dealt another blow
“The buy-to-let market has been dealt another blow now that the stamp duty surcharge on additional homes will increase to 5%. The market has already seen landlords selling up in anticipation of a tax raid, but this change will likely discourage small buy-to-let landlords from investing in property. One positive aspect to take away from recent activity in the buy-to-let market has been the downward trend of interest rates, plus there has been a healthy rise in mortgage product availability. However, those landlords facing dwindling profits may now decide this is the final straw. Borrowers must seek advice if they need support or indeed to navigate the latest deals if they are due to refinance.”
Pensioners
“The decision to means test the Winter Fuel Payment has been a key area of debate since Labour took power. Those not eligible for Pension Credit may be deeply concerned on how this will impact them, regardless of a rise to the state pension next year. The Chancellor has stressed this tough choice ensures the Government’s commitment to the triple lock pledge, to ensure the state pension rises fairly, which has benefited pensioners over recent years. However, energy bills have been notorious at eating away at disposable income, so cuts to such relief will face criticism. Despite this, it is worth pointing out that the winter fuel payment was universal, so it went to pensioners regardless of their wealth or income.
“Pensioners struggling with the cost of living and expecting to see a shortfall in retirement income would be wise to boost their existing pot or even set up a private pension elsewhere to supplement their income. Pensioners should be able to live comfortably, not cut back on necessities, like heating a home over the winter months.”
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Consumers who are anxious about how any of the changes announced today could impact them financially would be wise to seek independent advice to work out whether they are better or worse off.”
Hard-pressed savers
“The Budget overlooked an opportunity to support hard-pressed savers who may now end up in a higher rate tax-bracket, subsequently halving their Personal Savings Allowance (PSA). The income tax freeze will continue until 2028, so savers still have years to endure no increase to income tax thresholds. Savings interest rates have been coming down recently and those earning little to nothing on their hard-earned savings must shake apathy and switch their pots. Around £252bn is sitting in UK current or savings accounts earning no interest, according to the Bank of England. This money is slowly deteriorating from inflation, an unnecessary loss. There are many top savings accounts which beat the relentless eroding prowess of inflation, but it’s down to savers to move their money. Consumers must proactively review their pots and brace for impact of any further cuts to the Bank of England base rate before the year is over.”
Investment in the UK
“There needs to be more action to encourage UK investment, but the reality is that many consumers will not have the confidence or knowledge to dip their toe into the stock market. One area of the market which could be a good starting point for savers would be a stocks and shares ISA, as any allocated fund sectors can be set to marry up with someone’s attitude to risk. As a rule of thumb, investing over the longer term is preferable, but investors should know that past performance is never guaranteed to be reflected in future returns. It’s always wise to seek expert advice to adopt a new risk profile.”
Affordable Homes Programme
“The Chancellor has confirmed more investment in housing supply, with a top-up of £500m into the Affordable Homes Programme. Ramping up the supply of affordable housing is a daunting task, but it must be addressed to support those who desperately need a place to call home. The review into Right to Buy (RTB) is to ensure there is enough stock of social housing built to replace sold properties, and there will also be a consultation on caps to rent on social housing. These measures are not a quick fix but are an attempt to slowly re-build a housing system which is broken.”
Stamp Duty
“Those borrowers looking to buy a second home will see an increase from 3% to 5% from tomorrow. Those looking to buy a home may also be disappointed to see the thresholds at which borrowers start paying Stamp Duty Land Tax (SDLT) have not been raised, and that the temporary discount will revert at the end of March 2025. This reaffirms a window of opportunity for buyers as the nil-rate tax threshold up to £250,000 will drop to £125,000 and the First-Time Buyer’s Relief nil-rate tax threshold of up to £425,000 will drop back down to £300,000. These reliefs were destined to end and have been in place for over two years, but it poses yet another challenge for would-be buyers who are struggling to find an affordable home and feel their dream of homeownership is way out of reach.”
Lifetime ISA ‘missed opportunity’
“The chance to adjust Lifetime ISAs has sadly been overlooked, a missed opportunity to support first-time buyers. Despite rising house prices which demand higher deposits, the £4,000 LISA allowance has not been increased, nor has the upper limit on the property value threshold of £450,000. Those savers who therefore become ineligible through no fault of their own will have little option but to pull out their savings, incurring a penalty of 25%. It is disappointing that there are no plans to temporarily waive this charge, particularly as first-time buyers have a few months until the First Time Buyer’s Relief threshold reverts to where it was in 2022. Those considering a Lifetime ISA would be wise to check the full terms and conditions before they enter any arrangement to ensure they are eligible for the 25% Government bonus. If savers have any concerns, they may want to consider alternative savings accounts where they can move their money freely, but they will forego the Government boost that a LISA offers.”
Income tax thresholds freeze will end from 2028
“The anticipated ongoing freeze on income tax thresholds has not come to be, so this decision will slow down the rise of taxpayers falling into a higher tax bracket. This may still frustrate those looking for a more immediate change, particularly at a time when wages have been rising to cope with the substantial uplift to the cost of living. As inflation can influence wage rises, some may now end up in another tax bracket, so seeking advice on how this will impact their financial wealth is essential.”
National Living Wage and National Minimum Wage increases next year
“Consumers on the National Living Wage may be pleased to see a rise confirmed for the next tax-year, which will benefit more than three million workers. The increase is an inflation-busting 6.7%, worth £1,400 a year for a full-time worker, and Labour plans to work on closing the gap with 18- to 20-year-olds, seeing their largest increase on record, worth £2,500 a year. These hikes are good news for those struggling with the cost of living, but could concern small businesses who may have to consider hiking prices.”
National Insurance to rise to 15% for employers
“As widely anticipated, National Insurance contributions by employers will increase, up from 13.8% to 15%. However, the threshold at which businesses start paying National Insurance on a worker’s earnings dropping from £9,100 to £5,000 is likely to cause a stir with businesses. These changes could make them re-think their auto-enrolment policies and could hit employees’ wealth over the longer-term, but salary sacrifice schemes may become more attractive. The Chancellor has estimated these changes will raise £25bn.”
Buy-to-let market dealt another blow
“The buy-to-let market has been dealt another blow now that the stamp duty surcharge on additional homes will increase to 5%. The market has already seen landlords selling up in anticipation of a tax raid, but this change will likely discourage small buy-to-let landlords from investing in property. One positive aspect to take away from recent activity in the buy-to-let market has been the downward trend of interest rates, plus there has been a healthy rise in mortgage product availability. However, those landlords facing dwindling profits may now decide this is the final straw. Borrowers must seek advice if they need support or indeed to navigate the latest deals if they are due to refinance.”
Pensioners
“The decision to means test the Winter Fuel Payment has been a key area of debate since Labour took power. Those not eligible for Pension Credit may be deeply concerned on how this will impact them, regardless of a rise to the state pension next year. The Chancellor has stressed this tough choice ensures the Government’s commitment to the triple lock pledge, to ensure the state pension rises fairly, which has benefited pensioners over recent years. However, energy bills have been notorious at eating away at disposable income, so cuts to such relief will face criticism. Despite this, it is worth pointing out that the winter fuel payment was universal, so it went to pensioners regardless of their wealth or income.
“Pensioners struggling with the cost of living and expecting to see a shortfall in retirement income would be wise to boost their existing pot or even set up a private pension elsewhere to supplement their income. Pensioners should be able to live comfortably, not cut back on necessities, like heating a home over the winter months.”
