First off, what is the budget?
Every year, an event called the Budget is held in which the Chancellor gives the nation updated information on the country’s finances along with the government taxation and spending plans for the next year.
Given the uncertainty posed by the Brexit, the Budget didn’t take place in November 2019, it was postponed to 2020. Right now, the UK isn’t officially part of the EU anymore. Also, the government is composed in the most part by the Conservatives which have been reelected. On top of that, the Chancellor who was expected to present the Budget resigned. It has only been a matter of weeks since Rishi Sunak, the new Chancellor has taken this position. Nevertheless, the Budget has already been made public. Here is what you need to know to see how it affects you.
The Tampon tax will be no more… hooorray
EU regulations didn’t allow for the UK government to get rid of the VAT on sanitary products since they needed to be at least 5%. Although not all sanitary products are going to be left without tax since this would imply a great reduction in the country’s income given the massive amount of them bought as items of primary necessity, the tampon tax which will stop applying in a short time, more exactly, after December 31, 2020 at the end of Brexit’s transition period. Although, not a great savings, it is estimated that the average woman will save around £40 during her lifetime.
Minimum wage is increasing… YAY
Just like in any other given year, the minimum wage has gone up in 2020. This year, the minimum wage went up an average of around 5% for each of the different age groups. This is good news not only for students but also for the general population.
You can pay less National insurance.. Yupppeee
National insurance costs will be lowered. While income tax is paid when your income reaches £12,500 annually (not many students make this amount), many students may pass the threshold to pay for National Insurance contributions. In numbers, anyone that earns more than £166 a week or what it’s the same, £8,632 a year. This money goes to fund the NHS and the state pension. The new Budget, has a plan to increase this threshold gradually every year until it reaches £240 a week or £12,500 annually, this year, the increase already started and the new threshold is now £182 a week or £9,500 a year. This means that around 500,000 employes will stop paying this tax and at the same time, those that will keep paying it will save around £85 a year. For students, this is a good savings point to start with since the average British person spends £43.18 on food and alcoholic drinks eat and taken outside.
There will be no increase in taxes for alcoholic beverages. Normally, beer, wine, spirits, and cider are heavily taxed by the government. Taxes, also known as duties, are beneficial in two ways for these types of products. Not only do they mean more money to the government, but also are used as a means to prevent people from incurring into binge drinking and thus it reduces public health problems associated with that type of behaviour. This Budget gave a type of relief to the alcohol industry and pubs by not increasing the duties on alcoholic drinks. This is good news for students. We all know that drinking is part of the university and college life and it is perfectly acceptable as long as it is done in moderation. However, have in mind that the price of alcohol may go up should manufacturers decide to charge more for their products which is highly expected.
Improvements to Broadband and 4G coverage
High-speed broadband coverage and access will be improved by the £5 billion that will be invested for this purpose by 2025. The main goal of this plan is to connect that 20% of the country that has difficult access to it by giving them gigabit broadband, a very fast type of connection. That type of broadband is anywhere between 20 and 100% faster than some of the internet plans sold in the market. This is good news for students since they need a fast internet they can rely on to send their homework and in some cases for their jobs, especially, if they are freelance.
The best… Interest rates on student loans
Change in interest rates for student loans is also possible. Historically speaking, these rates can go either up or down and they depend on the Retail Price Index or RPI whic is one of the few ways inflation is measured. the new Budget has a plan to switch to the CPIH instead of the RPI when linking the interest rate of student loans. This can make interest rates go lower.