So, it has been a nervous week in financial planning, as the budget affects many people in different ways. In particular, I am always keen to review what changes are made to tax tables, pensions, and investments as well as businesses.
The good news is that the economy is predicted to grow at 6.5% over the current tax year, 6% in 2022, and 2.1% in 2023. The level of public sector net borrowing is also reduced according to the forecasts highlighted today.
So, the key thing the government has got right in this budget is rewarding those individuals on lower incomes with a pay rise.
The minimum wage in April is going to go up to £9.50 per hour up from £8.91, a rise of £0.59 per hour. This will go a long way to helping some of of the lowest paid workers in the country ensuring they have a living wage.
As usual we will get some businesses complaining that the minimum wage rise is too much, they are not able to afford it, yet in all the years I’ve been in business and working as an IFA I have never had any business come back a year later to say they have struggled with paying their workers the minimum wage. I believe the rate should have increased for all age groups to be the same for all individuals to avoid age discrimination in some cases where businesses only hire people under a certain age to save on wages.
Now what I wanted to see more of within the budget statement was the debt pile we have in the UK, and how this is going to be addressed. I also wanted to see information about how the level of fraud, and mismanaged funds could be clawed back by the government, including the NHS app which cost a staggering £37ish billion. I am still wondering how the cost was soo high, when the cost of HS2 initially was predicted at around this level, but let’s leave that for another day.
The bad news, which many predicted was inflation, which might hit 4% this year. This will basically erode any wage rises that are on the cards, as well as the value of the national living wage increase.
We have already been told about the National Insurance increase, which will reduce pay packets I.e. a person earning £24,000 will be £180 a year worse off. There is also the council tax rise, which will probably increase by around the inflation rate.
A sigh of relief is that the planned fuel duty increase has been scrapped, and rightfully so considering the price is ridiculously high. Ideally, the government should have increased fuel mileage allowances for those employed considering the price of fuel as well as the fact the rates have not been amended for a long time.
All views expressed are solely of the writer and do not express the opinions of the newspaper