Among the freeze in fuel duty, introduction of a levy on sugary soft drinks and announcements to overhaul the National Curriculum, there are a few points in the 2016 Budget that could help you save a bit of extra money each month towards owning a first property or completing your dream home transformation project. But what do all the numbers mean? And when can you reap the benefits of boosted savings? Here are three ways your finances could benefit in 2016 and 2017.
1. New Lifetime ISA if you’re under 40
You may have heard of the Help To Buy ISA launched in December 2015, but, from April 2017, everyone aged between 18 and 40 can open a Lifetime ISA to save for retirement or to buy a first home. You can save up to £4,000 each year and the government will add a 25 per cent bonus up to your 50th birthday. While you may want to keep saving until then and use the lump sum as a pension pot, you could save for a few years and put the money towards your first home, claiming the bonus through your solicitor when arranging the purchase.
2. Boost to ISA savings limit
Another benefit if you have a standard ISA already, the amount you can save each year will increase from £15,240 to £20,000 in April 2017 – great if you’re saving for a bathroom makeover or want to invest in new windows and doors to transform your home’s exterior.
3. Earn more before you pay tax
From April 2016, you can earn up to £11,000 before paying income tax (up from £10,600), but from April 2017, this will increase to £11,500, so you’ll see more net pay at the end of each month – every little helps. If you’re a higher earner, the point at which you pay the higher rate of Income Tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.
What do you think of the 2016 Budget announcement? Will you open a Lifetime ISA in 2017? Tweet @Lindsays_home
What the experts say…
‘The Budget failed to address the lack of housing supply, again skirting over any substantial changes to planning reforms. The same problems will remain – not enough properties are coming onto market, not enough new homes being built – and its first-timers who are seeing future dreams of a home drifting further out of reach. Although the Help to Buy ISA has proven popular, many are finding it increasingly difficult to save. The new lifetime ISA has the potential to increase savings ability – but the average deposit in January stood at £28,393. By this measure it would take an individual first-timer 6 years in order to save this amount.’ Richard Sexton, director of e.surv chartered surveyors
‘Following our calls for the government to lead the introduction of a pensions and savings dashboard, we welcome the commitment shown in the Budget. We hope that the industry uses the next three years to ensure it is a well-tested, market-wide pensions and savings dashboard that will help all consumers make sound financial decisions on retirement income.’ Richard Lloyd, executive director Which?
It’s startling that the provision of much-needed housing supply did not seem to be referred to at all, despite rhetoric in previous budgets seemingly encouraging public land to be turned over to address the housing supply issue. In previous budgets, Mr Osborne has enjoyed referring to fixing the roof whilst the sun is shining, may I respectively suggest that he turns his attention to building some roofs whilst the sun is shining instead.’ Russell Quirk, chief executive of eMoov