How the New Budget Impacts Those Under 25
By Archie Mitchell, Business Reporter
The recently announced Budget by Chancellor Rachel Reeves involves various measures that could influence the lives of individuals aged 25 or under. This includes modifications affecting income tax thresholds, wage increases, and the introduction of a new tax on sugary drinks. Here are nine notable impacts:
- Higher Minimum Wages: From April, minimum wage will see an increase, most notably for 18 to 20-year-olds whose hourly wage will rise by 85p to £10.85. Under-18s and apprentices will receive a 45p increase to £8 per hour, while those over 21 will see a 50p increase to £12.71. The government aims to align wages for younger workers with those of older counterparts, though there are concerns about potential hiring freezes.
- Student Loan Repayment Thresholds Frozen: Commencing in 2027-28, the threshold for repaying student loans will remain fixed at the current level of £28,470. This freeze implies that borrowers earning above this threshold will pay more than if adjustments were made according to inflation. An additional international student levy is established to support maintenance grants for specific courses.
- Possible Increase in Rental Costs: Reeves announced a 2% tax increase on property income which might lead landlords to exit the rental market, potentially reducing housing supply and elevating rent prices.
- Support for Youth Employment: With a £1.5 billion allocation, the government plans to assist 16 to 24-year-olds in securing work or training, including paid placements for those unemployed for an extended period. Refusal to participate could result in loss of benefits.
- Online Shopping Costs May Rise: The removal of the 'de minimis' loophole by 2029, currently allowing small goods imports without customs duty, could lead to higher costs for online purchases.
- Milkshake and Sugary Drink Tax: Common beverages such as pre-packaged lattes and protein shakes will be subject to a sugar tax, impacting consumers who frequently purchase these items.