The Chancellor delivered his Autumn Budget outlining the government's plan to get the economy back on track, but what impact will that have on young people?
The budget featured heavy tax rises and spending cuts in order to fill a £54billion 'black hole' in the UK economy and tackle the cost-of-living crisis. Today the independent Office for Budget Responsibility (OBR) warned that the disposable incomes of UK households would fall by 7.1% over the next two years.
The budget included some measures that would impact young people and their finances, including a rise the National Living Wage, and keeps some measures introduced in former-Chancellor Kwasi Kwarteng's disastrous mini-budget, like the reversal of April's National Insurance rise and a rise in the stamp duty threshold for first-time buyers.
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Here's everything you need to know:
National Living Wage
As part of the statement Jeremy Hunt announced announced a rise to the government's 'National Living Wage' to £10.42 an hour, which is due to come into effect from April 1st 2023. This increase represents an annual pay rise worth more than £1,600 to a full-time worker.
Katherine Chapman, Director of the Living Wage Foundation, said: “The significant rise in the National Living Wage to £10.42 is welcome news for low-paid workers struggling with rising inflation. It’s encouraging that the government is taking steps to increase the pay on the lowest incomes as prices continue to rise. However, the rates remain lower than the real Living Wage – currently £10.90 in the UK and £11.95 in London – which is based on what it actually costs to live."
First-time buyers
For first-time buyers, the stamp duty threshold increased from £300,000 to £425,000 in Kwasi Kwarteng's mini-budget, and this change has stayed despite most of the other policies in the mini-budget being reversed. This means that any first-time buyers buying a property under £425,000 will not have to pay stamp duty tax, and this will remain in place until 31 March 2025.
Mortgage rates weren't mentioned specifically in the budget, but they are impact by inflation, and the budget is aimed at reducing inflation. Measures like the extension of the energy price guarantee past April and higher taxes have been introduced to curb inflation, which would then mean there is less pressure on the Bank of England to raise rates.
House prices are expected to fall by nearly 10 percent over the next two years, according to the OBR. The decrease is mainly driven by higher mortgage rates and the wider economic downturn.
Changes to means-tested benefits
Hunt also confirmed that any means-tested benefits, including universal credit, would rise in line with the September inflation figure from next April. This means they would go up by 10.1%, which he said would mean a family on universal credit would benefit next year by around £600.
Income tax
Everyone will be paying more income tax under the new measures, with the Chancellor extended the freeze on tax threshold for a further two years until 2028. You start to pay income tax on annual earnings of more than £12,570, charged at 20%, and the new freeze means that £12,570 figure will not change, so as people's wages go up to combat the cost-of-living crisis, the tax thresholds won't change to reflect that and a pay rise will almost certainly mean a greater proportion of your income is taxed.
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