The spring budget, or just the budget, is when the government updates people on the UK economy, shares what is expected to happen to it in the future, and lays out what changes they will make with laws and schemes that will affect the economy.
We will not cover everything in the Budget, just what should be important to the people we support. I will also try to explain why the chancellor is doing some of these things.
Explaining what the Chancellor is doing and why does not mean we support his actions or think it is a good idea; we are just trying to help inform people.
National Insurance will be cut, but what is National Insurance? It is a tax on earnings and self-employed profits. You normally start paying when you turn 16 and earn over a certain amount.
Your National Insurance contributions (NICs) decide if you qualify for certain benefits, like, State Pension Maternity Allowance and Jobseeker’s Allowance.
They also decide how much State Pension you’ll get when you retire. You need at least ten qualifying years of contributions to get any amount and at least 35 years to receive the full amount.
If you don’t work, you might be able to get National Insurance credits instead. For example, if you’re a carer or claim benefits due to ill health or unemployment.
For employees paid between £12,571 to £50,270 a year, the current NI rate is 10% on earnings and 2% on earnings above that. The chancellor said this would fall to 8% in April. Someone earning £25,000 a year will save another £249 a year from the latest change. Higher earners will take home an additional £754 a year.
Existing government policy means income tax thresholds have been frozen since 2021 and will remain so until at least 2028. Income tax thresholds are how much you pay depending on your earnings. These normally rise in line with prices.
That means any kind of pay rise could mean more of your income is taxed than would otherwise be expected.
It has been estimated that 3.7 million more people will be paying income tax, and 2.7 million will move into the higher bracket by 2028 because of these changes.
The chancellor is doing this as he thinks that people will vote for him if they pay less tax on their earnings. He said many times in the Budget how Labor raises tax and how his party cuts taxes.
But this may not mean you pay less tax overall as some councils have faced severe financial pressures, like Nottingham city council, leading to cuts to local services. This means they will likely raise council tax in April to try to get more money. Councils in England have until 11 March to decide how much they will raise taxes.
The chancellor announced in the autumn that a range of benefits received by millions of people, such as universal credit, would rise by 6.7% in April in line with how prices have risen. But it is still very hard for many people to get on PIP or to stay on it due to how harsh the system can be.
The state pension will go up by 8.5% in April. This change may be to try to win over older voters.
The National Living Wage for over-23s – paid by employers – will rise from £10.42 an hour to £11.44 an hour in April.
In terms of child benefit there will be an increase of £10,000 in the amount individuals are allowed to earn before Child Benefit starts to be reduced.
Child Benefit eligibility rules for higher-earning individuals will also change. Part of the rule is that if you earn over £50,000, you are taxed on your child benefit. This means you have to fill in a tax return for HMRC. But the amount you can earn before being taxed has increased to £60,000.
However, many feel the system is still unfair as it is decided by the amount of money the highest earner makes. This means you can have a household with one person earning £50,000 who will have to pay child benefit tax, even if no one else in the household makes very much money. But a household with two people earning £49,000 each would not have to pay the tax – despite them earning much more money. But any changes will only come in April 2026 due to how complicated the law around tax can get.
Regardless, this will likely be a popular change and may win some votes, even though the Conservative government created this unpopular rule in the first place.
To try to reduce the amount of people vaping, particularly children, the Chancellor is increasing taxes on vaping products. This means they will cost more to buy. This is probably to try to appeal to parents who are worried about their children vaping.
The taxes on alcohol and fuel will stay frozen, which means that fuel and alcohol prices will not go up until 2025. But this doesn’t mean they will go down.
Overall, the Budget may not help people who are struggling with money, as the money they pay in taxes will just shift from paying their local council instead of national insurance. Changes to child benefits will take a long time to happen and increases in other benefits won’t help if people can’t get onto them.
Autistic Nottingham 