UK Budget 2016: What It Means for Families

The UK budget for 2016 was announced on Wednesday, and George Osborne had some good and bad news for families. Here is a look at the outcome for all ages.

One of the main focuses in the run up to the budget was the possibility of the Chancellor stating that all schools were to become academies by 2020. This was confirmed, with all primary and secondary schools becoming free from government control—or in the process of it—by 2020. It has been hit by opponents, who say that this will not necessarily a good thing. Some say that it will mean schools benefit as head teachers have more control over budgeting and curriculum.

Another one for schools is that 25 percent of all schools will have the option of being open later. The idea is that children will be able to take part in extracurricular activities. This is another element that has been hit with mixed views. Teachers wonder when they will get the chance to do their marking, but some parents view it as a good thing depending on the school curriculum offerings.

Drivers and drinkers have not been hit as expected with the UK budget. Osborne announced that fuel duty and tax on alcohol would remain the same. Only wine drinkers would be affected, which will go up with inflation. Smokers have been the most heavily affected, with tax rising 2 percent more than inflation.

However, households will benefit from a higher tax free personal allowance. The basic rate tax will not be applied on the first £11,000 from April 6, as was announced last year. Next year, that allowance will rise to £11,500. There are expectations that the personal allowance will be up to £12,500 by the end of the Conservative Party’s term.

Higher rate tax brackets will also change. As Labour and the Coalition had brought the bracket down, the Conservatives want to increase it. From 2017, the bracket when individuals start paying 40 percent tax will be £45,000. This indirectly affects those on those earning more than £100,000, when they start to lose their personal allowance.

Younger people could benefit from the new Lifetime ISAs being introduced. Those who are currently under 39 will get the opportunity to save within on, where the government will pay 25 percent per year on all savings up to £4,000. That means an extra £1,000, but there is a catch. The money can only be used on retirement after 60, a house deposit or be released when the person is terminally ill without incurring severe financial penalties.

The normal ISAs will still be available to all. This tax free allowance will increase from £15,000 to £20,000.

Families will be hit with the insurance premium tax. This is applied to all insurances, except life insurance, and will rise from 9.5 percent to 10 percent. It had only just recently increased to the 9.5 percent level. The aim of the new tax is to raise more money for flood defenses, which will go to the likes of Leeds, York and Cumbria, which were all hit badly in the Christmas Day flooding.

The Chancellor believes that the budget deficit will be wiped out by 2020, although there are skeptics believing that this is too optimistic and could lead to other financial difficulties. To lower the deficit, the Government had recently announced disability benefits would be cut, angering hundreds of thousands.

One big talking point has been the sugar tax, which will be introduced on all fizzy drinks from 2018. The Daily Voice news has already covered this tax and how companies have reacted.

Featured image from Twitter: tweet included above.

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