Martin Lewis Reacts to the 2024 Budget

Summary

Martin Lewis offers a comprehensive analysis of Chancellor Rachel Reeves' UK budget, highlighting the political nature of the fiscal plan. He discusses key tax increases, including the rise in National Insurance for employers, and the impact of changes to stamp duty, especially for homebuyers. Lewis also critiques the government's claims about pension increases, pointing out discrepancies in the state pension rise figures and the challenges faced by the poorest pensioners who don't claim pension credit. Despite efforts to boost public services, Lewis questions the broader financial burden on individuals.

Takeaways

• 😀 Rachel Reeves' budget is described as a political one, with transparency about the £40 billion in tax rises.
• 💰 The tax increases focus on funding investments in public services like the NHS and education.
• 📈 National Insurance rise for employers is a key point, reflecting the government's decision to shift tax burdens after prior promises to avoid raising taxes for employees.
• 🏠 Stamp duty for second homes increases by 2 percentage points, from 3% to 5%, impacting those purchasing additional properties.
• 🔑 The planned end of temporary stamp duty thresholds next April will result in more people paying stamp duty on properties above £125,000, down from £250,000.
• 🏡 First-time buyers will face higher stamp duty as the threshold drops from £425,000 to £300,000 starting next April.
• 🧑‍🌾 The inheritance tax changes for family farms may have significant consequences, reducing tax exemptions and affecting family businesses.
• 💸 The £470 uplift for state pensioners applies only to those on the full new state pension, with many receiving less (e.g., £360 for old state pension).
• 👵 Over 700,000 pensioners eligible for pension credit are not claiming it, missing out on benefits such as the winter fuel payment.
• ❄️ There was no mitigation provided for the means testing of winter fuel payments, leaving some of the poorest pensioners without support.

Q & A

What is the main focus of Rachel Reeves' first budget, according to Martin Lewis?

Martin Lewis explains that Rachel Reeves' first budget is politically focused, with a significant emphasis on increasing taxes to fund public services, especially healthcare (NHS) and school infrastructure. The budget involves £40 billion in tax rises, which are aimed at maintaining investment in these public sectors.

Why did the Chancellor choose to raise taxes on businesses instead of individuals, according to Martin Lewis?

Martin Lewis suggests that the Chancellor's decision to raise taxes on businesses, particularly through an increase in National Insurance for employers, was influenced by previous political promises. The Conservative government had already promised not to raise taxes on employees, which led to the shift in burden to employers.

What is the controversy surrounding the National Insurance rise in the budget?

The controversy centers around the National Insurance rise for employers, which Martin Lewis notes is a reversal of earlier tax cuts for employees. The tax cuts were politically motivated ahead of elections, and now, with the need to raise taxes, the government has shifted the burden to employers instead of reversing the cuts for employees.

How will the changes in stamp duty affect homebuyers?

The budget includes an increase in stamp duty for second homes, with the surcharge rising from 3% to 5%. Additionally, from next April, the threshold for paying stamp duty will decrease: it will start at £125,000 (down from £250,000), meaning more people will have to pay stamp duty when buying a house.

What will happen to first-time buyers in terms of stamp duty next April?

First-time buyers will also face a change in the stamp duty threshold starting next April. The threshold for paying stamp duty will decrease from £425,000 to £300,000, meaning more first-time buyers will have to pay stamp duty, and those buying properties above £300,000 will see higher costs.

What issue did Martin Lewis raise regarding the state pension rise?

Martin Lewis pointed out that the £470 rise in the state pension, which was quoted by the Chancellor, is misleading. Only those on the full new state pension will see this rise. Most pensioners, especially those on the old state pension, will see a lower increase of £360, which means the majority will not receive the £470 uplift.

How does the winter fuel payment issue relate to the budget, according to Martin Lewis?

Martin Lewis highlights that the winter fuel payment issue was not adequately addressed in the budget. Despite the Chancellor's claim that the poorest pensioners are being protected, many pensioners who are eligible for pension credit are not claiming it and will therefore miss out on the winter fuel payment. Lewis criticizes the lack of mitigation for this issue.

What did Martin Lewis think about the lack of measures to address the non-claiming pensioners?

Martin Lewis is concerned that around 700,000 of the poorest pensioners are eligible for pension credit but are not claiming it, and as a result, they miss out on benefits like the winter fuel payment. He criticizes the budget for not addressing this issue and providing support for these vulnerable individuals.

Why is the rise in stamp duty for second homes a notable change in the budget?

The rise in stamp duty for second homes is notable because it increases the surcharge from 3% to 5%. This policy change is aimed at addressing the housing market and possibly discouraging speculative property purchases. It is a significant adjustment for those buying second homes or investment properties.

What does Martin Lewis think about the political motivations behind the budget?

Martin Lewis acknowledges that the budget is politically motivated, with decisions driven by the need to maintain public services and respond to previous political promises. He suggests that some decisions, such as the shifting of tax burdens from employees to employers, are the result of the government's attempts to balance policy with political promises made in previous elections.