What the Budget means for you | Commercial awareness on The Gateway

What the Budget means for you

Lucy Mair looks at the impact of the chancellor's latest Budget on students and graduates

When chancellor George Osborne took to Twitter before delivering his third annual Budget to parliament, the response was lukewarm at best. The same can be said of the reaction to his latest package of measures to balance the books while kickstarting the economy.

Osborne's Budget for "people who want to work hard and get on" delivers some small tax cuts for individuals and businesses, but will continue to squeeze the public sector by cutting the budgets of most government departments and maintaining the cap on public sector pay. Here, we take a look at some of the changes that are likely to affect you...

Creating jobs

One of the biggest tax breaks in the Budget is the Employment Allowance, which gives all British businesses £2,000 off their National Insurance contributions - the levy employers pay towards benefits and pensions for their employees.

The move is designed to create more job opportunities, particularly at small firms and startups, by making it easier and cheaper for employers to take on new people.

Combined with other measures to boost the economy, there are expected to be 600,000 more jobs this year than last year. Industries that stand to gain from this year's Budget include construction, which has been allocated £15 billion for infrastructure projects by 2020, and shale gas projects, for which tax allowances have been made, so expect more opportunities in these sectors.

Your earnings

Good news for most graduates is that the chancellor will take a little less income tax from your pay packet each month. The Budget brings forward a planned rise in the personal allowance - the amount you can earn before paying income tax - to April 2014.

From next April, the amount earned before income tax is paid will be £10,000 - instead of £8,105 in the current tax year and £9,440 in the 2013-14 tax year. The move will take over 250,000 low earners out of the tax system and benefit a further 24 million people on salaries under £41,865.

In practical terms, this means if you start a graduate job on a salary of £25,000, you'll be £280 better off a year from next April than you would be today. National Insurance contributions for employees will remain at 12 per cent on earnings above £7,605.

Getting around

Whether you have your own car or regularly take public transport to and from university, you should be pleased to hear that the 3p rise in fuel duty, which was due to come into force this September, has been scrapped.

Fuel duty has been frozen at 57.95p per litre since March 2011. This means over 40 per cent of the price you pay at the pump is fuel duty and, with the addition of VAT, almost 60 per cent of fuel costs go directly to the government. Higher fuel duties would have made driving more expensive and could have pushed up the cost of public transport and seriously harmed the economy. Pressure remains on the government to cut the fuel duty.

Nights out

The cost of going to the pub could rise or fall depending on your drinking habits. If you're a beer drinker, it's good news: a planned 3p rise in beer duty has been scrapped in favour of a 1p price cut, and the alcohol duty escalator - an annual price increase of 2 per cent on top of inflation (currently 2.8 per cent) - has been abolished on beer.

The difference it'll make to your pocket is small change. If you drink 12 pints of beer a week, you'll be £5.55 better off in 2013/14 than you were last year - enough for an extra pint or a kebab on the way home. But it'll make a big difference to Britain's breweries and pubs, which have struggled during the economic downturn, by helping them to grow and create jobs.

If your preferred tipple is wine or mixed drinks, the Budget will make your nights out more expensive. The alcohol duty escalator will remain in place on wine and spirits, meaning a year-on-year duty increase of almost 5 per cent will hit consumers and the industry. If you drink three bottles of wine a week it'll cost you £14.60 more this year than it did last year, and if you consume 12 mixed drinks a week it'll cost you £17.59 more than last year.

Related Posts

Brexit: 5 reasons to stay positive if you’re a graduate jobseeker

Following the unexpected EU referendum results we look at where there could be positive outcomes for graduate careers

10 things you need to know about the oil industry

We speak to a Commercial Trainer at BP to find out what you need to know, whether you're pursuing a graduate career at an oil firm or an investment bank

Comments