An unsurprising Budget

By John Battersby

At 72 minutes, the Chancellor’s Budget speech was a little longer than usual - and it also contained a rather odd collection of jokes about public toilets (!) - but what does it all mean for savers and investors?

 

It was billed as a Budget for hard-working families with help for ‘strivers, grafters and carers’. Let’s take a quick look at some of the key announcements that might affect your personal finances.

  • One of the biggest announcements was that the threshold for basic rate tax will rise to £12,500 from April 2019. Income below this threshold is tax-free and income above it is taxed at 20%. The higher rate threshold will increase to £50,000. Income above this threshold is taxed at 40%. (Note, income tax rates and thresholds in Scotland will be announced by the Scottish Executive on 12 December).

  • The lifetime allowance for pension savings will increase to £1,055,000 in April.

  • Fuel duty was frozen for a ninth year in a row and more money was allocated to fixing pot holes in roads.

  • Taxes on most types of alcoholic drink were frozen.

  • Stamp duty relief is extended to properties worth up to £500,000 through the shared ownership scheme.

Was there any news for savers and investors?

Once again, there were slim pickings for savers and investors in the Budget. The Individual Savings Account (ISA) tax-free allowance will again be frozen at £20,000, and the personal savings tax-free allowance stays at £1,000 for basic rate taxpayers and £500 for higher-rate taxpayers. Once the impact of inflation is factored in, these allowances are actually reducing.

Delving deeper into the Budget fine print, there are some minor amendments to National Savings & Investments Premium Bonds rules around gifts for children, and the minimum investment falls from £100 to £25. However, just before the Budget, NS&I announced that from next year onwards its index-linked savings certificates will be updated by the Consumer Price Index of inflation, rather than the generally higher Retail Price Index.

The big picture remains unchanged. Savers’ money continues to be eroded in deposit accounts that promise safety but fail protect against value being reduced by inflation. Stock markets are again showing their volatile nature. So it’s no wonder that more and more people are looking to RateSetter for a better way to put their money to work, accepting a little risk in exchange for greater returns and better value.