Everyone’s talking about the Autumn Budget, and for good reason. It impacts living costs for all of us across the UK. So, here’s a look at what the Budget could mean for your money, and how rising levels of inflation could impact any ‘gains’ you might make.
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What does the Autumn Budget mean for living costs?
The Autumn Budget covers a huge amount of ground, from business rates to house prices. From a day-to-day living perspective, though, here are the key points you should know about.
National Living Wage
From 1 April 2022, the National Living Wage will rise to £9.50. What’s more, then National Minimum Wage rates will also rise. For example, the rate for a 21-year-old will rise from £8.36 to £9.18, and the rate for a 17-year-old will go up to £4.81 from £4.62.
The increase is welcome news for anyone on minimum rates!
Universal Credit
Universal Credit (UC) is a type of means-tested benefit. It works on a tapered basis, meaning that once you start earning more money, your Universal Credit ‘tapers off’ so you can’t claim as much.
By December 2021, the taper rate will fall from 63% to 55%. For claimants, this is good news because they won’t lose so much of their UC just because their earnings increase slightly.
Fuel duty
We’re still seeing rising fuel prices, but there’s no rise in fuel duty – a tax placed on fuel before it’s sold in forecourts. This should be of some relief to drivers across the UK, even if fuel costs are unpredictable right now.
Alcohol
In this Autumn Budget, we’re saying farewell to duty on the draught beer or cider served in pubs, and duty placed on sparkling wines. So, it might be cheaper to visit the pub if you enjoy a pint of beer now and then.
Energy
Although energy prices are rising, the Autumn Budget didn’t include a VAT reduction on household energy bills. However, low-income households may still be entitled to other financial support this winter. Check with Citizens Advice if you’re unsure whether you can claim.
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How does inflation affect the Autumn Budget and living costs?
Okay, so that’s how the Autumn Budget might affect our living costs. But what about inflation? Does it have a part to play? Yes. Experts predict that inflation could rise to 4% over the coming months, which might spell bad news for living costs. Here’s why.
Inflation is essentially a way to measure how the cost of living changes over time. When living costs rise overall, there’s inflation. When costs fall, there’s deflation.
Right now, we’re seeing an overall spike in living costs across the UK, from rising energy bills to steep house prices. So, even if the Autumn Budget means you’re getting a wage rise, increased living costs mean your money might not go very far.
The upshot? Sure, we can take some positives from the Autumn Budget, but there’s still a great deal of uncertainty around the impact of rising inflation on our wallets over the coming months.
How do I protect my finances after this Autumn Budget?
Even during uncertain times, you can still take steps towards boosting your finances. To help you get started, here are some ways to save money this winter.
- Shop smart! Always check the deals on offer – one brand might be a few pounds cheaper than the others.
- Save money on gas and electricity by using your heating sparingly throughout the day.
- Check whether you’re entitled to any benefits you’re not receiving yet. An organisation like Citizens Advice can help if you’re unsure where to start.
- If you have a high-interest credit card, consider whether switching to a 0% credit card could help you save money. Or, check out some rewards credit cards – you can earn rewards like loyalty points and cashback over time.
Finally, if possible, start building an emergency cash fund now. Try opening a savings account to keep yourself accountable.
Autumn Budget: takeaway
With living costs potentially on the rise, many families might be worried about their finances after the Autumn Budget announcement. If you’re concerned about how you’ll pay your bills this winter, make sure you reach out to your creditors and explain the situation. Tackling the problem early can make your debt more manageable in the long run.
