What the Budget means for your money

On Wednesday, chancellor Rishi Sunak unveiled this government's first Budget. The Budget is where the government lays out its plans for spending, tax, and borrowing for the year ahead.

You'd be forgiven for thinking you'd fallen asleep and woken up in a parallel universe with Labour at the helm. Featuring some big spending plans that will require plenty of government borrowing, this was not a typical Budget for a Conservative government.

The Conservative party made plenty of promises in their election manifesto last year (even before coronavirus hit) and now they're spending to deliver on those promises. There's a £30 billion fiscal stimulus to mitigate against the impacts of coronavirus and £100 billion increase in public service spending.

Journalists and economists are busy consuming the detail buried in the 125 page document. We thought we'd focus on the key points from the budget that affect you and your plan, whether you're looking to buy a home, grow your money, or just get on top of your finances.

Interest rate cut of 0.5% to 0.25%

We know, this wasn't technically part of the budget but it is part of a much wider response as alluded to on page 37 of the budget. In response to supporting those with COVID-19 they say 'HM Treasury will continue to work closely with the Bank of England to coordinate the response of the UK authorities to ensure it is as effective as possible'.

This is great news for home buyers as it may reduce the cost of your mortgage, although those changes sometimes take a while to feed through. It's not so good for those with savings and investments as the returns are likely to be lower.

Even though a large fiscal stimulus and a rate cut should have shored up the stock markets, the wider concerns around a global recession have sent them spiralling down again today. Don't forget though, investing is a marathon not a sprint and performance should always be measured over the longer term.

Annual National Insurance saving of £104

With a typical employee saving around £104 and a typical self-employed person around £78 in 2020-21 this is a winner for everyone.

You could go out and splash out on a dinner for two, or some gadget you have had you eye on for a while, or you can just let it be eaten up by day to day life. Alternatively, you could invest your £8.65 away each month and watch that money grow.

Junior ISAs and Child Trust Fund allowance increased to £9,000

This has more than doubled, which is a massive increase and great for anyone who wants a tax efficient way to invest for their children's future.

£9.5 billion for the Affordable Homes Programme

More good news for home buyers, this extra investment is aimed at helping people get onto the housing ladder. The funding will support the creation of more homes across the country and expectations are that it will increase availability in the shared ownership space.

What next?

There is obviously way more to the Budget than savings on NICs, a doubling of the Junior ISA allowance and a cash injection for the affordable homes programme.

It detailed a spending spree aimed at improving the economic outlook for the UK. Infrastructure, R&D, the environment and the NHS all did well, but they weren't alone. For those wanting to read the full report, we have included the link here.

There is debate over whether or not this truly delivers 'levelling up' along with a whole host of other issues. Most of us are back seat chancellors with strong opinions so we suspect those debates will rage for a while yet.

If the personal finance landscape wasn't confusing before, it certainly is now. There is so much information out there on what, when and how to invest, how to buy a home, and the best ways to save.

We recommend checking in with your Multiply plan. We do all the hard work under the watchful eye of the regulators so you can rest assured that you money is working for you.