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How the Budget Affects You

Man with a calculator and pen working out finance on a notepad at a table with coins
Author: Samuel Beckingham
Updated: Mar 13, 2024
5 minutes read

On Wednesday last week, Jeremy Hunt outlined the budget. He highlighted his main goal was to help relieve the tax burden and get more people into work in order to stimulate the economy. Coupled with the previous 2p cut in National Insurance announced last year, the chancellor says this is worth £900 for 27 million workers.

With another cut to National Insurance, it’s time to take a look at how the changes in the Spring Budget actually affect you. We’ve split these analyses into different salary amounts to be more helpful.

Following on from how they look on paper, we’ve included what these cuts mean compared to the freezing of tax thresholds over the years.

Tax Changes From April 2024

If we take the headline figures, the Office for Budget Responsibility (OBR) puts the cuts in National Insurance to the following. Basic rate taxpayers (20%) will receive an annual gain of £303, higher rate taxpayers (40%) will receive £646 more a year, and additional rate taxpayers (45%) will be £705 better off a year.

In monthly pay packets, this roughly translates into an extra £25, £53 and £58 a month.

Depending on how you look at the numbers, you can get a different story. You will need to factor in tax threshold freezes to get a clear picture of how much better off you will be. This is done in the final section.

You can see how the changes in National Insurance look in theory from April below.

£15,000

The average worker on £15,000 will have a take-home pay of £14,320.

This is an increase of £85 compared to last year, giving you £7 more a month.

£20,000

The average worker on £20,000 will have a take-home pay of £17,920.

This is an increase of £260 compared to last year, giving you £21 more a month.

£25,000

The average worker on £25,000 will have a take-home pay of £21,520.

This is an increase of £435 compared to last year, giving you £36 more a month.

£30,000

The average worker on £30,000 will have a take-home pay of £25,120.

This is an increase of £610 compared to last year, giving you £50 more a month.

£35,000

The average worker on £35,000 will have a take-home pay of £28,720.

This is an increase of £785 compared to last year, giving you £65 more a month.

£40,000

The average worker on £40,000 will have a take-home pay of £32,320.

This is an increase of £960 compared to last year, giving you £80 more a month.

£45,000

The average worker on £45,000 will have a take-home pay of £35,920.

This is an increase of £1,135 compared to last year, giving you £94 more a month.

£50,000

The average worker on £50,000 will have a take-home pay of £39,520.

This is an increase of £1,310 compared to last year, giving you £109 more a month.

£55,000

The average worker on £55,000 will have a take-home pay of £42,457.

This is an increase of £1,320 compared to last year, giving you £110 more a month.

£60,000

The average worker on £60,000 will have a take-home pay of £45,357.

This is an increase of £1,320 compared to last year, giving you £110 more a month.

Freezing Tax Thresholds

The OBR has done some of their own calculations in response to the tax changes announced. Thanks to how the tax thresholds have been frozen, they’ve estimated that any potential gains will be wiped out for the majority of people.

This means that some people will be dragged into higher tax bands, including some who don’t yet pay tax. The OBR has said this will add 3 million more taxpayers, over 2 million more higher rate taxpayers and over half a million more additional rate taxpayers by 2028.

Worse Off

According to analysis from the Institute for Fiscal Studies (IFS), for every £1 given in tax cuts, £1.30 will have been taken away due to threshold changes between 2021 and 2024. This rises to £1.90 in 2027.

You can see how their calculations affect workers depending on salary amounts in the graph below.

IFS Tax Graph 2024

In simple terms, you only start paying income tax and National Insurance once you earn £12,570 or more. Anything above £0 in this graph equates to paying more tax, while anything under indicates a tax cut.

For anyone earning between £12,750 and £26,000, the cut in National Insurance is cancelled out by the frozen tax thresholds, meaning you’ll be worse off.

Anyone earning between £26,000 and £60,000 will receive more from the National Insurance cuts, so are the only group that benefits.

For those earning £60,000 or more, the cuts in National Insurance will make them worse off.

Road to 2028

By that same analysis, things get worse when we get to the 2027/2028 tax year.

IFS Tax Graph 2028

If things carry on as they are, by 2027/2028, anyone earning around £15,000 and £60,000 or more will be over £500 worse off a year.

Only those earning between £32,000 and £55,000 a year will be better off.

Offset Tax Increases

If you’re in the tax band that means you’re worse off, there are always ways to claim money back.

Marriage Tax Allowance

Marriage can be a benefit in and of itself. For anyone who’s yet to claim it, you can backdate it by four years to receive even more of a discount. This can give you up to £1,256. What’s more, every year going forward gives you tax relief of £252.

Start your Marriage Allowance claim by clicking on the button below.

Unaffordable Lending

If you had a store card or credit and your limit was increased without your consent, you could be owed a refund. Borrowing additional money to pay off existing loans is a sure sign that you’re suffering from unaffordable lending.

Make an unaffordable lending claim by clicking on the button below.

Flight Delay

Any flight that was delayed by at least three hours is due compensation. The maximum entitlement is £520, and that’s per passenger. This means a family of four could be due £2,080!

Find your flight and start a claim by clicking on the button below.