The Budget is an annual announcement from the Chancellor of the Exchequer, currently George Osborne, on the state of the UK's finances.
The Budget is announced at the end of the financial year. It covers
How public money from taxes will be spent in the coming year
The state of the economy in the UK
How we are doing against our economic objectives, such as debt reduction
Predictions for the future
The Budget, also known as the Financial Statement, is drawn up by the Chancellor of the Exchequer. The part containing financial forecasts is produced by the Office for Budget Responsibility.
After being carried to the House of Commons in its famous red briefcase, the Budget is announced to the Members of Parliament by the Chancellor. Also listening are members of the press, and via television coverage, the rest of the country. The speech can take several hours as it covers every element of the UK’s spending.
After the Budget is heard, the leader of the opposing political party will traditionally respond to the Budget speech, and MPs will debate the tax changes suggested in the Budget for around 4 days.
Once everything is agreed, the tax changes are put into a new Finance Bill. This is presented to Parliament and needs to be agreed for the Budget changes to become law.
Some changes, however, will come into force on the same day as the Budget speech, without having to go through the Finance Bill step. The House of Commons can approve these changes after the speeches have finished, and they are put into action immediately. This is called the Provisional Collection of Taxes.
The Chancellor usually starts off with a recap of how things have gone in the last year for the UK economy, reviewing income and expenditure, inflation, trade and investments, and the country’s level of debt. Then, he or she moves on to proposing changes to taxation.
The Budget covers a range of areas including
Alcohol and tobacco
Transport and fuel
Tax and pensions
Welfare and benefits
Trade and export
Investment and borrowing
Who does the Budget affect?
The Budget affects all of us in one way or another, whether it’s through the amount of income tax we pay, how much we can save or give to our children tax-free, or the effects it has on our local economies. Some people will feel the effects of the Budget more than others. For example, if there’s more tax to pay on fuel, a taxi driver will pay more, but a cycle courier won’t be affected in the same way.
Nationwide customers and the Budget
We have campaigned for Budget reforms to benefit our customers and the UK public.
We called for the Government to equalise the savings limits for cash ISAs and stocks and shares ISAs. We hoped to encourage more people to save in cash ISAs by increasing their tax-free savings allowance. We also wanted more flexibility between both types of ISAs, to allow people to transfer their funds between stocks and shares ISAs and cash ISAs.
In 2014’s Budget announcement, a new £15,000 ISA limit was unveiled. The new ISA (or ‘NISA’) allowance can be used for cash, stocks and shares or a mix of the two. So not only has the amount you can save been raised, (it was previously limited to £5,760 for a cash ISA) you can choose how much of your allowance you want to devote to savings or investments.
We also pushed for a change to Stamp Duty Land Tax laws. Before 2014, buyers became liable for large tax bills when their property prices hit certain thresholds. We called for a more proportionate Stamp Duty Land Tax system where the tax increased gradually with property prices. Happily for UK home owners, the system was revised in December 2014, resulting in Stamp Duty Land Tax savings for a huge majority of UK buyers.
The Budget has been an annual fixture since 1860, when the first red leather briefcase was wielded by William Gladstone. See footage of past Chancellors delivering the Budget to No.10 on Gov.uk