Everyone is affected by what the Chancellor announces during their Budget speech. Things like income tax, NICs and the Personal Allowance have an impact on you whether you are an employee or an employer. Then there’s funding for the NHS, armed forces, schools and all our other wonderful public services, including the benefits system. If you have your own company, business rates, VAT, corporation tax, R&D tax relief and a whole host of other bits of the tax system apply.
How much of the Budget speech did you understand?
Everyone listening to the Budget speech is simultaneously trying to understand what is being said and figuring out how it applies to them. This is made all the more difficult by some of the abbreviations and obscure or technical language used by Philip Hammond.
Guide to 12 Budget 2018 words and phrases
Here’s our quick guide to what 12 of them actually mean. In no particular order…
A percentage of your income that you have to pay to the government. Most people pay 20%.
How much you are allowed to earn before you pay any tax at all. The Budget announced that this will go up to £12,500 in April 2019.
Refers to the government’s money. For example, fiscal policy is the government’s plan for how it is going to make and spend its money.
A chosen economic policy to prioritise bringing down government debt, by raising taxes and spending less.
How much wealth you have. Anything you have that is of high financial worth, including money.
Stands for the Office for Budget Responsibility. This is an independent body set up to “examine and report on the sustainability of the public finances”. They keep an eye on the government’s fiscal policy and report on how well they are sticking to their Budget promises.
Not paying enough tax, but not breaking the law while doing it.
Not paying enough tax by breaking the law.
Stands for Private Finance Initiative. A continuously controversial policy which allows public bodies, like hospital trusts, to bring in private contractors. You may have heard this being described as public-private partnerships. The Chancellor announced in this Budget that PFI contracts are being stopped.
Indexed in line with inflation:
Inflation is when everything goes up in price. If something is indexed in line with inflation, it means that it will also go up at the same rate as inflation. For example, if your salary was not indexed in line with inflation, then your cost of living could rise but you’d bringing home the same amount of money.
The deal here is the final Brexit deal. The dividend part is based on some peoples’ hope that the UK will get a huge injection of money from businesses who suddenly want to invest and, crucially, pay tax here. (Yes, because we have left the EU.)
This one is very specific to companies that buy land they intend to build on. Sometimes they don’t start construction, but just keep the land in the bank. They predict (speculate) that the land will increase in value over time and they can make an easy profit by not building and just waiting for the land to go up in price.