Every year the papers are splashed with photographs of the chancellor holding up that red suitcase in front of Number 10 with a big grin on his face - having just set out the plans for the next financial year. More often than not, what comes out of it is difficult to dissect and apply to our own lives. Here, personal finance expert and founder of SavvyWoman.co.uk, Sarah Pennells, breaks it down...
Despite this being the fourth Budget in 12 months (well, three plus an Autumn Statement) there were still a few headline-grabbing measures and a lot more in the small print. George Osborne highlighted the fact that the gender pay gap has never been smaller, but how will his Budget measures affect women?
This was the big Budget announcement for savers. It’s designed to help anyone who wants to save for a deposit or for their retirement and it’s aimed at first time buyers and people who are self-employed (who can’t join an employer’s pension scheme).
Figures show that younger women are more likely than men to buy a property; a study by BlackRock showed that 38% of women aged 25-34 have a mortgage compared to 31% of men, so it could be of particular benefit to women.
Under the plans, you will be able to take out a lifetime ISA if you’re aged between 18 and 40 when it’s introduced next April and you can pay in up to £4,000 a year until you’re 50. The government will pay £1 for every £4 you pay in.
A lifetime ISA will only be able to be used to buy a first property costing up to £450,000, although the government will look at whether it should be able to cashed in for other ‘live events’. Under the current plans, if you cash it in to buy something else, you’ll have to pay a 5% charge and you would lose the government bonus. However, you will be able to cash it in for your retirement once you’ve reached 60.
Rise in the personal allowance
From April 6th this year, the personal allowance (the part of your income that you don’t pay tax on) will rise to £11,000 a year. And in the Budget, the chancellor announced that it will increase to £11,500 from April 2017, meaning you will be £100 a year better off if you’re a basic rate taxpayer.
But it’s higher rate taxpayers who have the most to gain as the rate at which you start to pay tax at 40% rises from £43,000 to £45,000 in 2017-18. This is less likely to benefit women than men, as women make up just over one in four of all higher rate taxpayers.
Shared parental leave and pay
In his Budget, George Osborne confirmed that working grandparents will be able to share parental leave and pay so they can help with childcare. We don’t know exactly how the plan will work - there will be a consultation into it starting in May. However, it’s most likely to help single mothers who don’t have a partner to share their leave with.
Parents returning to work
One of the more cryptic Budget measures involves the behavioural insights team (the so-called ‘nudge unit’) looking at new ways to ‘support parents’ in choosing how and when to return to work. The behavioural insights team used to be part of the government but it’s now independent and it looks at ways of making public services more cost effective and encouraging people to make ‘better choices’. It will be interesting to see what it comes up with…
Childcare tax allowance
The childcare tax break has already been announced (several times!) and is due to be introduced next April. In the Budget, the chancellor said that it would be rolled out in such a way that parents with the youngest children could join it first. The plan is for all parents who are eligible to be able to enrol by the end of 2017.
The tax allowance is worth up to £2,000 per year for each child and is available to working parents who earn less than £150,000.
Women in financial services
The gender pay gap may be reducing, but financial services has the highest gender pay gap of any sector in the UK. The Budget included information on a report to be published next week by Jayne-Anne Gadhia, who’s chief executive of Virgin Money. She will publish her recommendations on how to get more women into senior roles in financial services. Definitely one to watch!
The pensions industry has been given the task of designing and funding a pensions dashboard. The idea being that you’ll be able to see all your pension accounts in one place. Women tend to retire on less than men but can have more pensions (with smaller amounts in them). A pensions dashboard should make it easier to see how much all your pensions are worth and to make sure you don’t lose track of them.
In the Autumn Statement the chancellor announced that the 5% VAT charge on tampons and other sanitary products would be paid to women’s charities (a measure that provoked a fair amount of criticism). Yesterday he confirmed that £12 million from the tampon tax would be paid to a range of women’s charities, including Breast Cancer Care and the Rosa Fund.