What does the Spring Budget update mean for you?

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    The Spring Statement has been presented, with some significant changes made to deal with the United Kingdom’s current challenges and to spur the nation’s future growth. Aside from these key spending changes, the government also announced further amendments that may have an effect on you and your loved ones’ lives.

    Changes to Junior ISAs
    The amount that can be placed in a Junior ISA or a Child Trust Fund will increase from £4,368 annually to £9,000 annually from April 2020.

    The changes to this type of tax-free savings account are intended to help families save for the future for relatives under the age of 18. The new limit will be put into place as of Monday 6 April 2020.

    Increase to the National Insurance threshold
    The National Insurance contribution threshold will be raised to £9,500 in the next tax year (from £8,362 this year). The Chancellor believes this will provide a tax cut for 31 million UK citizens, saving the ‘typical employee’ approximately £104 across the year.

    No changes made to the Inheritance Tax System
    The government did not make any changes to the current Inheritance Tax system.

    Read our guide on Inheritance Tax and how to prepare for gifting in later life

    Changes made to pension allowances
    The government increased the upper limit of the tapered annual allowance from £110,000 to £200,000, in a move intended to protect doctors seeking early retirement from unfair higher rates. The minimum tapered annual allowance amount has been lowered from £10,000 to £4,000.

    The lifetime allowance for pensions has been increased to £1,073,100 for the 2020–2021 tax year in line with September’s inflation figures of 1.7%. This amount represents the upper limit for tax-privileged pension funds a person can gain during their lifetime.

    Find out more about changes to lifetime pension allowances

    Increased spending for better broadband and 4G coverage
    The Chancellor has committed £5 billion to provide gigabit-capable broadband to 95% of the UK within the next five years, offering broadband speeds of up to 40 times faster than standard.

    £510 million will also be dedicated to expanding current 4G coverage, with the aim of bringing 4G to 95% of the UK’s total landmass by 2025.

    Greener changes to new housing construction methods
    To lower consumer energy bills and to ensure that newly-built homes are better for the environment, the government will introduce a ‘Future Homes Standard’ by 2025. This will help to future-proof new homes, with low-carbon heating facilities and better energy efficiency.

    Extended incentives to purchase ‘green’ vehicles
    The current Plug-in Car Grant which offers purchasers a discount on electric vehicles will be extended to the 2022–2023 tax year. The grant is offered to dealerships, which in turn pass the savings on to customers. The UK’s current network of charging ports for electric vehicles will be expanded, with £500 million dedicated to ensuring no driver will be more than 30 miles from a charging station.

    New legislation to protect cash payments and access
    The government plans to create legislation to protect cash payments for all those who use cash, rather than card, in their daily lives. With current branch and cash machine closure rates, UK citizens can often find it difficult to access their cash.

    Better pothole funding
    The government will give local councils £2.5 billion of funding to fix approximately 50 million potholes in UK roads.

    Scrapping of reading tax on digital books, newspapers and academic journals
    The 20% sales VAT will no longer be levied on ebooks, digital newspapers and journals to match the zero-rating on print versions of the same publications.

    Scrapping of ‘tampon tax’ on women’s sanitary products
    As of 31 December 2020, the controversial ‘tampon tax’ of 5% VAT on women’s sanitary products will be abolished. This should save women £40 over their lifetime.

    No changes to alcohol duty
    Alcohol duty on wine, spirits, beer and cider will remain the same for the next tax year, keeping the little luxuries more accessible.

    Where can you find out more information on the Spring Statement?
    If you are looking for further information on the Spring Statement and its potential effects on you and your loved ones, you can find out more on the official government website.

    Find out more about the Spring Budget here

    Mortgages
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    Investments
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