The UK budget is an annual statement that outlines the government’s plans for the economy.
It can impact everything from the taxes you pay to the benefits you receive, so understanding its implications is crucial.
With this in mind, and with the new Spring Statement just announced, we’ve pulled together a guide outlining the key changes and how these might impact your finances. So, if you’ve got questions such as ‘What will be in the budget?’ and ‘How will the budget affect me?’, let’s dive straight into it.
What is the UK budget?
The UK budget is a statement delivered by the Chancellor of the Exchequer outlining the government’s financial plans. It details how funds will be allocated across various sectors and unveils key economic policies and priorities.
In addition to the main budget, the UK Spring Statement is typically delivered in March, and this serves as a seasonal update building on the plans set out in autumn.
Keeping a close eye on these announcements is key, as it enables you to prepare for any changes to your income and make plans for the future.
What does the budget mean for me?
The budget impacts people in different ways, depending on factors like income, lifestyle, and whether you receive government support. Here’s a breakdown of some of the key areas it can influence:
1. Taxes and National Insurance
One of the most direct ways the budget can affect you is through National Insurance and tax changes. For instance, the budget might adjust the thresholds at which you start paying tax. The personal allowance (the amount you can earn before paying income tax) could change too, and there may be an increase or decrease in National Insurance rates.
According to the Spring Statement, the current income tax and National Insurance thresholds will stay the same until 2028/2029, after which they’ll rise according to inflation. While there will be no tax increases, the Chancellor highlighted that there’s going to be a thorough crackdown on tax evasion.
2. Benefits and welfare
For people who rely on government benefits, both the UK budget and Spring Statement can have an impact on the amount of support you receive.
- Universal Credit: The amount available for Universal Credit may be adjusted. If the Chancellor increases funding, this means more money for those who are out of work or are on low income. In the Spring Statement, it was announced that the standard allowance will rise for a single person aged 25 (from £92 weekly in 2025/2026 to £106 by 2029/2030).
- Pensions: The budget might also influence state pensions, including increases to the basic state pension. Private pension contributions and tax relief could also be impacted.
Disability benefits: There may also be changes to disability benefits like Personal Independence Payment (PIP). For instance, the most recent Spring Statement outlined that PIP eligibility criteria will be tightened. The government plans on introducing an extra eligibility requirement for the daily living element of the benefit.
3. Income, spending, and the cost of living
Wages and the cost of living are both major topics in both the UK budget and Spring Statement. From changes in public service funding to rising minimum wage payments, here’s how things can change:
- Wage increases: Wages can rise and fall, with the most recent Spring Statement revealing that the National Living Wage for over 21s will increase by 6.7% (to £12.21 an hour) from 1st April 2025. The National Minimum Wage for those 18-20 will also rise to £10 an hour.
- Spending: Taxes like Fuel Duty and Air Passenger Duty can fluctuate too. For instance, the last budget revealed that to meet carbon reduction commitments, £2 will be added to the price of a one-way short-haul flight.
- Cost of living: The UK budget plays a key role in shaping the cost of living, which directly impacts household budgets. This includes changes to public service funding, housing, childcare, and education.
4. Savings, Investments, and Loans
UK budget changes can also have a significant impact on how much you can save and invest:
- ISAs and savings: The UK budget might adjust allowances for tax-free savings accounts like ISAs. However, the most recent autumn budget revealed that allowances will remain the same (£20,000 for an adult ISA, and £9,000 for a junior ISA).
- Student loans: Equally, for current students or graduates, changes in loan repayment thresholds and interest rates might affect how much you owe and when.
How to prepare for budget changes
From tax changes to adjustments in the benefits available, the UK budget can impact your finances in various ways. And while some changes might work in your favour, others can have a more negative impact. With this in mind, here are some final thoughts on how you can prepare:
- Build an emergency fund: While you can’t predict what future budgets will bring, you can prepare by building up a financial safety net. There’s no need to put away huge chunks of money, just save little and often to ensure you have an emergency fund to fall back on.
- Build a budget: It’s just as important to build a budget, reviewing your income as well as your spending habits. A well-planned budget can boost your cash flow and give you flexibility when changes arise.
- Commit to continuous learning: It’s a great idea to stay informed about taxes, savings, and investments. The more you know, the better prepared you’ll be to navigate budget changes.
“From frozen tax thresholds to changes in benefit support and the rising National Living Wage, this year’s Spring Statement highlights how government decisions can affect our everyday finances,” says Andy Forsyth, Chief Financial Officer onboard Moneyboat.
“It’s a reminder that while we can’t control the economy, we can still try and be as prepared as possible.
“Building an emergency fund, reviewing your budget, and staying informed about changes can all help you navigate what’s ahead with more confidence.”
Moneyboat are here to help
Here at Moneyboat, we understand that sometimes an unexpected cost can catch you off guard, especially in periods of adjustment. So, in times like these, we offer fair and flexible short-term loans, ranging from £200 to £1,500.
You can use the funds to tide you over until your next paycheck, then pay the money back in manageable instalments. With our thorough eligibility check process, we’ll ensure you can comfortably meet the repayment deadlines, protecting your credit score in the process.
Or, if it’s additional insights you’re after, just head over to the Moneyboat blog. There you can dive into our guide on financial wellbeing tips and support which has plenty more advice.
And remember, you can always contact Citizens Advice and StepChange for free guidance. Whether you’ve got questions about benefits, savings, or loans, there’s always help available.
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