Budget Countdown: Top 5 Changes to Expect

Sam Jackson

March 18, 2014

November 13, 2018

Budget Countdown: Top 5 Changes to Expect

The economy may be improving, but with the general election still more than a year away, Chancellor George Osborne is determined that we are only halfway through his austerity plan. So it is no surprise that he has warned MPs not to expect any fireworks in the 2014 budget.

Nonetheless, there are likely to be some interesting trade-offs as the Chancellor seeks to implement some long-term growth policies. Here's our lowdown of the top five changes to expect...

1) Personal allowance increase

Appearing on The Andrew Marr Show on BBC One, George Osborne spoke of his pride at the increase in the personal tax allowance on income tax, and it is all but certain that Wednesday's budget will see the allowance increased from £10,000 to at least £10,500. That will come as great news to base rate taxpayers, but cost the Treasury more than £1.5 billion.

The decision also suggests the budget will ignore calls from some Conservatives, including former chancellor Nigel Lawson, to raise the threshold for the 40% top rate of tax.

2) More housing

Mr. Osborne was also animated in his description of Britain's first garden city in nearly 100 years, which the Conservatives are planning to construct at Ebbsfleet in the Thames Estuary.

It's no surprise to see his immediate focus on the South East, but this 15,000-property development would be just part of a planned investment in 120,000 new homes. What's more, the budget is also expected to announce an extension to the Help to Buy equity loan scheme, which enables prospective house buyers to purchase a new-build property with just a 5% deposit. Previously scheduled to wrap up in 2016, it is now expected to run to at least 2020.

3) National Insurance changes

Plenty of pundits, including senior figures at auditors BDO, are anticipating changes to the way National Insurance contributions are calculated - primarily as a move to ease the burden on employers and boost businesses.

Some say he might instigate a temporary reduction in Employer's National Insurance contributions, although The Guardian suggests the budget will bring forward plans to cut Employer's National Insurance for the under-21s.

4) Minimum wage increase

Following recommendations from the Low Pay Commission, the government has already announced a 19p increase in the national minimum wage - taking it to £6.50 for over-21s from October 2014.

Just because the news has already come out, don't expect it to pass by unmentioned in the budget. This is a big budget change that will be thrown at every criticism of excessive austerity.

5) Alcohol duty up again

Despite polls claiming that as many as 78% of Brits want to see an end to alcohol duty hikes in a bid to save pubs and restaurants, it looks likely that the budget will see George Osborne continue with his Alcohol Duty Escalator - which increases duty on wine and spirits by inflation plus 2%.

Meanwhile, commentators are widely predicting that petrol duty will again be frozen, so a steady course may still benefit some British consumers.

To see how the budget affects you, use our free money management software to calculate the changes on your saving and spending. You can view all of your accounts in one space, and get a clear view of where you stand.

 

Posted by Marc Murphy, Marketing Manager at Money Dashboard.

 

Sam Jackson

Money Dashboard

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