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What does the Budget 2024 mean for you?
On Wednesday 6th March, Chancellor Jeremey Hunt announced a broad range of measures that could impact your household’s finances. In this article we will provide a concise overview of the proposed measures which may help you plan and budget for the future.
For more details about the various changes visit the government's website.
Tax/ NI
From 6 April NI will be cut by 2p, from 10% to 8% and those who are self-employed this would be 8% to 6%.
It is estimated that for an average employee this would provide an additional £450 a year, whilst for the average self-employed this could amount to £350 a year.
National Living Wage
The National Living wage from April 2024 will have the following changes:
Minimum wage will be:
- £11.44 per hour for adults aged 21 and over (up from £10.42 per hour, for those aged 23 and over, and up from £10.18 for 21-to-22-year-olds)
- £8.60 per hour for 18-to-20-year-olds (up from £7.49)
- £6.40 per hour for under 18s and apprentices (up from £5.28)
“We welcome the increases, especially for those who are 21 and over who are now entitled to the national living wage.”
Benefits and Pensions
Inflation-linked benefits and tax credits will rise by 6.7% from April 2024, in line with the Consumer Price Inflation (CPI) rate in September 2023.
For example, from April 2024:
- Universal credit standard allowance for a single person aged 25 and over will increase from £368.74 to £393.45 per month. For joint claimants both aged 25 and over, the standard allowance will increase from £578.82 to £617.60 per month.
- New state pension will increase to £221.20 per week for those reaching State Pension age on or after 6 April 2016, up from £203.85 in 2023/24.
- Basic state pension will increase to £169.50 per week (the core amount in the old State Pension system), which is up from £156.20 in 2023/24.
- Pension credit standard minimum guarantee will increase to £218.15 per week for single claimants and £332.95 per week for couples.
- Child benefit income threshold will be higher from £50,000 to £60,000 in April 2024 with the top of the taper for withdrawing the benefit being raised from £60,000 to £80,000. This is estimated to benefit half a million families. There will also be a consultation on child benefit rules, specifically on moving the higher income charge to a household not individual charge, to be introduced by April 2026.
“We welcome the changes but this still does not address 2 people below the level but penalising families where 1 person is a higher earner. The Government will consult on a household charge but not for another year.”
Payments related to cost of living
Cost of living payments: will not be continued. The Household Support Fund (HSF) will be extended for another 6 months providing the most vulnerable families targeted support amounting to £500 million in total.
To find out more information on how to claim to the HSF you can find more information on the government’s website or reach out to your local council.
“Cost of living payments and the HSF have been a lifeline for those on low incomes. We are concerned this vital support will increase indebtedness - making people choose between heating and eating. Whilst we welcome this short-term extension, we worry it won’t effectively meet the needs of those living on low incomes.”
Budgeting Advances: The government is increasing the repayment period on budgeting advance loans taken out by claimants on Universal Credit from 12 months to 24 months. This will apply to new Budgeting Advances taken out from December 2024 and will reduce the monthly repayments on these loans, relieving financial pressure on low-income households on Universal Credit.
Local Housing Allowance: To support low-income households with increasing rent costs, the government announced that Local Housing Allowance (LHA) rates will rise to the 30th percentile of local market rents from April 2024. This will benefit 1.6 million low-income households, who will be around £800 a year better off on average in 2024-25.
“Rents have been rising at an exponential rate, and the LHA has not been catching up. Although this change will go some way to address the disparity in actual rents and LHA rates, it doesn’t go far enough.”
The government is extending the duration of the Additional Jobcentre Support pilot across England and Scotland for a further 12 months. This pilot will continue to test how intensive support at specific points in a Universal Credit claimant’s journey can help support them into employment or higher earnings. As part of the pilot extension, claimants will also be required to accept a new claimant commitment at 6, 13 and 26 weeks, agreeing to more work requirements or have their claim closed.
Debt Relief Order: to support households struggling with problem debts, the government is making it easier to access a Debt Relief Order (DRO). DRO’s are a personal insolvency debt solution for individuals who cannot pay their debts. The government is removing the £90 administration fee from 6 April 2024 and also raising the maximum debt value threshold from £30,000 to £50,000 and increasing the maximum value of a motor vehicle that an individual can retain from £2,000 to £4,000, from 28 June 2024.
“We are pleased with some of the measures the Government has announced today, although we are concerned that many of these do not go far enough and coupled with support packages such as the cost of living payments ending at the end of March 2024 and the HSF scheme ending in September 2024, this paints a bleak future for those who are struggling with their finances. “We are however really pleased with the announcements regarding Debt Relief Orders, which will open up this option to many more people who may have not been able to afford the fee or have debts above £30,000. We hope this change will allow many more people to become debt free.”
- Charlene Marks, Head of Mental Health and Money Advice