Martin Lewis reveals ‘hidden’ changes in Budget including stamp duty, ‘unfair’ child benefit rule and Universal Credit
MARTIN Lewis has revealed several “hidden” changes from Rachel Reeves’ Autumn Budget and shared his views on the matter.
Rachel Reeves presented her financial blueprint for the upcoming year yesterday, featuring a reduction in pub beer prices alongside increases in the minimum wage, state pension and benefits.
Elsewhere, raids on inheritance tax mean that bereaved families will have to pay tax on their deceased loved ones’ pensions.
These headline-grabbing announcements have dominated recent news, but Martin Lewis has shed light on several lesser-known changes in the Budget documents that warrant everyone’s attention.
Among the key issues he addressed were adjustments to stamp duty, the contentious child benefit rule, and forthcoming alterations to the Help to Save scheme for those on Universal Credit.
The founder of MoneySavingExpert.com also highlighted several issues that were not addressed in the Chancellor’s plans yesterday.
Here’s what you may have missed…
CHILD BENEFIT
The government will not proceed with the reform to base the high-income benefit charge (HICBC) on household incomes.
Martin said: “Currently, if you earn over £60,000, you start to lose child benefit, then you lose it totally at at £80,000.
“Last year it was £50,000 and £60,000 so they put the threshold up.
“However, that was a temporary move, so the government could change child benefit eligibility so that it is based on a household income instead of individual income.”
At the moment, child benefit begins being withdrawn when one parent earns over £60,000 a year.
This means two parents earning £59,000 a year – totalling £118,000 in the household – each receive the benefit in full.
Whereas a household earning a lot less than that does not get the full payment if just one of the parents earns over £60,000.
Martin added: “The promise was to shift eligibility to household income, but buried in the papers, they will not do that.
“So they will stick to an individual income assessment for child benefit.”
This is because it would have come at a significant fiscal cost of £1.4 billion by 2029-30 if setting the threshold to £120,000-£160,000, where no families would lose out.
You can read more about the tax here.
STAMP DUTY
Martin said: “What was announced is that stamp duty is to rise for people buying second homes.
“However, what wasn’t said is that the temporary increase in the stamp duty thresholds, which is set to expire next April, could have been extended by the Chancellor but wasn’t.”
“However, she hasn’t extended it. So, in real terms, stamp duty is going up next April.”
As a result, from April 2025, a first-time buyer purchasing a property valued at £425,000 will incur a stamp duty charge of £6,250.
Stamp duty is one of the additional upfront costs that purchasers may incur when buying a property.
Currently, first-time buyers are exempt from paying stamp duty on properties priced up to £425,000.
If a property is more expensive, they only pay tax at 5% on the portion above £425,000 and up to £625,000.
The lower limit for first-time buyer stamp duty exemption was temporarily increased back in 2022 from £300,000 to £450,000.
The maximum value of a property on which first-time buyers’ relief also rose from £500,000 to £625,000.
Similarly, the threshold at which all other buyers begin to pay stamp duty was raised from £125,000 to £250,000.
However, these thresholds will now revert to their previous levels from April 2025.
It’s a huge blow for all home buyers and means they have just months left to get a sale across the line before the thresholds at which stamp duty becomes payable fall.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
You pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Land is transferred to you or property in exchange for payment, for example, you take on a mortgage or buy a share in a house
The rate you pay depends on the price and type of property and certain thresholds.
If you are a first-time buyer no stamp duty is due if the property is worth £425,000 or less.
You’ll also get a discount if the purchase price is £625,000 or less and will only pay 5% SDLT on the portion from £425,001 to £625,000.
Those who aren’t first-time buyers will pay different rates depending on the value of their new home:
- If it’s up to £250,000 – no stamp duty is paid
- For the next £675,000 (the portion from £250,001 to £925,000) – stamp duty is charged at 5%
- For the next £575,000 (the portion from £925,001 to £1.5million) – stamp duty is charged at 10%
- For the remaining amount (the portion above £1.5million) – stamp duty is charged at 12%
For example, if you are buying a home worth £300,000 you would pay stamp duty at a 5% rate on the £50,000 – £2,500.
You’ll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.
HELP TO SAVE
Martin said: “We also had a notice in the Budget documents about Help to Save – which is the savings plan for people on Universal Credit.”
The scheme offers lower earners a savings account where they can save a maximum of £50 a month for four years and receive a 50% government boost at the end of year two and year four.
The government will extend the current Help to Save scheme until April 5, 2027.
However, the Budget documents also state that the government will extend Help to Save to all Universal Credit claimants that work.
Currently, Help to Save is only available to those on Universal Credit with a take-home monthly pay of £793.17 or more.
Are there any free cash schemes if I'm struggling?
MANY of us are still struggling with the high cost of living - but there's help you can get.
New or expectant parents can get up to £442 a year to spend on food through Healthy Start scheme.
Some new parents can get £500 via the Sure Start Maternity Grant. The money is designed to help you cover the costs of having a child.
Councils also offer support through the welfare assistance schemes, to help cover the costs of essentials, from buying new furniture to food vouchers.
The amount you can get varies but an investigation by The Sun found that hard-up Brits can apply for help worth up to £1,000.
Discretionary Housing Payment is a pot of money handed out by councils to those struggling to keep a roof over their heads.
A scheme is available for those who find themselves unable to cover housing costs, though the exact amount varies as each local authority dishes out the cash on a case-by-case basis.
Many energy forms offer grants to help cash-tight customers. The exact amount varies depending on your supplier and you circumstances, but could be as much a £2,000.
MISSED ANNOUNCEMENTS
However, Martin Lewis highlighted several issues that were not included in the Autumn Statement or the Budget documents.
He said: “Things I was hoping would change but haven’t…
“Lifetime ISAs – the problem that many young people who’ve saved into a LISA to buy their first home have is that they’re priced out because it has to be a first home worth under £450,000.
“And to get money out of LISA, if you’re not buying it for a qualifying first home, you have to pay an effective fine of 6.25% to the government.
“I was hoping they would change the rules so that you wouldn’t have to pay a fine if you take your money out of a LISA.”
The LISA was launched in April 2017 and is a savings product which is designed to help people save for either a first home or retirement.
It effectively replaced the former Help to Buy ISA.
The account is tax-free and anyone between 18 and 39 can open one.
You can save up to £4,000 a year and the government will then add a 25% bonus on top, effectively giving you free money.
However, LISA savers have to pay a 6.25% fine if they buy a home costing over £450,000 – a cap which has been frozen for seven years.
This is also classified as an “unauthorised withdrawal” penalty.
This has become more of a problem in recent years as house prices have risen sharply since the £450,000 limit was originally introduced.
Martin added: “Plus, no news on mortgage prisoners, no news on student maintenance loans going up, no news on WASPI compensation either, so quite a few things that I was hoping for that aren’t in the Budget.”
A mortgage prisoner is a homeowner who is unable to switch to a better mortgage deal, even though they are keeping up to date on their payments. Mortgage prisoners are often trapped with their existing mortgage, paying more money than they need to.
WASPI women refers to an estimated 3.8million women born in the 1950s who have been badly hit by a change in state pension age from 60 to 65.
The acronym stands for Women Against State Pension Inequality.
The women represented were born between April 6, 1950, and April 5, 1960.
The WASPI campaign was set up in 2015 in a bid to help those affected by the change in state pension age.
BRITAIN’S MOST MEMORABLE BUDGETS
Today is the first Labour budget for 14 years – and the first ever to be delivered by a female Chancellor.
Brits are bracing for a raft of tax hikes as Rachel Reeves tries to plug the “£22billion black hole” she says she’s found in government accounts.
Here are five other budgets which have caused a stir over the years.
1979 – Geoffrey Howe, Conservative
Margaret Thatcher’s Chancellor Geoffrey Howe slashed both the top rate of income tax and the standard rate.
He also doubled VAT – shifting the tax burden from income to consumption in a huge change for Brits.
Howe also eased controls on foreign exchange in a bid to control inflation.
The budget signalled a massive break from the last Labour government and set the pattern for decades to come.
1988 – Nigel Lawson, Conservative
Nigel Lawson (dad to domestic goddess Nigella) massively slashed income tax again.
The deputy Commons speaker twice cleared the chamber amid noisy protests from Labour MPs slamming the tax cuts.
Lawson also set off a property bonanza by announcing an end to double mortgage tax relief for couples buying homes.
1993 – Norman Lamont, Conservative
In March 1993 the economy was still reeling from Black Wednesday, when the pound crashed out of the European exchange rate mechanism.
Lamont announced tax rises including VAT on domestic gas and electricity.
Later that year Lamont’s successor Ken Clarke froze personal tax allowance and brought in stealth taxes on insurance and plane passengers.
The Lamont and Clarke budgets marked the end of the Tories’s scything tax cuts – and set the stage for Labour’s return to office in 1997.
2002 – Gordon Brown, Labour
Brown raised national insurance by a penny on the pound to fund higher spending on the NHS.
The future PM had fretted over a possible backlash from voters who had re-elected Labour in 2001.
But he managed to pull off the largest rise in health spending in the history of the NHS.
2009 – Alistair Darling, Labour
Labour’s last budget before today came amid the credit crunch and soaring unemployment.
Darling ramped up taxes and borrowing in a bid to fill up draining Treasury coffers.
Tory leader David Cameron blasted Labour’s ‘utter mess’ – and was in power a year later.
2022 – Kwasi Kwarteng, Conservative
Kwarteng unveiled his economic package less than a month after becoming Liz Truss’s Chancellor.
Technically, it was a fiscal statement rather than a budget – but it turned out to be just as seismic.
Rising Tory star Kwarteng announced £45billion in tax cuts including a drop in all rates of income tax.
Markets took frights and the pound went into freefall before the Bank of England waded in to stop a run on UK pension funds.
Mortgage rates soared and Kwarteng was out of the job just three weeks later.