If you’re struggling to make sense of what the latest Budget — a.k.a. the day the chancellor poses outside 10 Downing Street with a big red suitcase and an even bigger grin — means for you and your family let us break it down for you.
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Whether you’re saving for a deposit for a house or for your retirement, the announcement of a lifetime ISA will be good news. Designed to help anyone who wants to save, particularly first-time buyers and the self-employed (who don’t have the option of an employer’s pension scheme), it will allow anyone between 18 and 40 to pay in up to £4,000 a year until the age of 50. For every £4 paid in, the government will contribute £1.
Beware of the small print: A lifetime ISA will only be able to be used to buy a first property costing up to £450,000, although the government will consider whether it should be used for other “life events.” Under the current plans if you cash it in to buy something else you’ll be liable for a charge and would also lose the government bonus. However you will be able to cash it in for your retirement once you’ve reached 60.
For all taxpayers
From April 6, 2016 the personal allowance (the part of your income that you don’t pay tax on) will rise to £11,000 a year. And, in the Budget, the chancellor announced that it will increase to £11,500 from April 2017, meaning you will be £100 a year better off if you’re a basic rate taxpayer.
Higher rate taxpayers have the most to gain as the rate at which you start to pay tax at 40 percent rises from £43,000 to £45,000 in 2017-18. Unfortunately there was nothing in the Budget about equal pay for women meaning the rise in personal allowance is less likely to benefit women than men.
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Working grandparents will be able to share parental leave and pay so they can help with childcare, with further information expected after a consultation in May. This is likely to be most helpful to single mothers who don’t have a partner to share their leave with.
The childcare tax break, which has already been discussed to death due to having been postponed from 2015, will be introduced in April 2017. The chancellor said that it would be rolled out in such a way that parents with the youngest children could join it first, aiming to have all parents who are eligible able to enrol by the end of 2017.
The tax break is worth up to £2,000 per year for each child and will be available to working parents who earn less than £150,000.
For women in financial services
The Budget referred to a report, Empowering Productivity — Harnessing the Talents of Women in Financial Services, by chief executive of Virgin Money, Jayne-Anne Gadhia. which will be published next week. It will provide recommendations on how to get more women into senior roles in financial services, the sector with the highest gender pay gap of any in the U.K.
For anyone who menstruates
Last year the chancellor announced that the 5 percent “tampon tax” (the VAT charge on tampons and other sanitary products) would be paid to women’s charities. Yesterday he confirmed that £12 million would be paid to a range of women’s charities, including Breast Cancer Care and the Rosa Fund.
He later told the BBC Radio 4 Today programme that he expected an announcement “in the next few days” that the U.K. will be able to “reduce the rate to zero” on women’s sanitary products.