Brace Yourself: How the Latest Budget Could Impact Young Adults in Surprising Ways!
Chancellor Rachel Reeves has unveiled a new Budget that brings several changes that significantly impact individuals under 25. Here are the nine key alterations that could affect young people’s lives:
Minimum Wage Increase: Starting April, wages will rise for those aged 18 to 20, with an increase of 85p to £10.85, while under-18s and apprentices will see a 45p uptick to £8 per hour. Over-21s will benefit from a 50p increase to £12.71. This raises concerns from businesses about potential job freezes.
2. Student Loan Repayment Changes: A freeze on the student loan repayment threshold starting from 2027-28 could lead to higher repayments for those earning over £28,470 with loans taken post-2012, as these thresholds won’t rise with inflation. New students starting in 2023 will have a lower threshold of £25,000.
3. International Student Levy: An introduction of a £925 levy per overseas student will take effect in 2028, intended to fund maintenance for disadvantaged domestic students.
4. Increased Property Tax: To address the imbalance in taxation, property income tax will see an increase of 2%. However, the Office for Budget Responsibility cautions that this might lead to rising rent prices if landlords exit the rental market.
5. Job Creation Fund for Young People: A £1.5 billion initiative aims to support 16 to 24-year-olds through work placements, with £820m specifically for creating paid opportunities for those out of education or training for over 18 months.
6. End of Tax Loophole for Online Shopping: The closure of the ‘de minimis’ loophole (allowing parcels valued under £135 to avoid customs duties) could drive up prices from 2029, particularly for popular online retailers.
7. Milkshake Tax: An introduction of a tax for high-sugar pre-packaged drinks will start in 2028, potentially increasing prices on products like Yazoo and some protein drinks as part of the obesity prevention strategy.
8. Changes to First-Time Home Buying: A new consultation in 2026 could overhaul the rules surrounding the Lifetime ISA to assist first-time homebuyers better, potentially removing penalties associated with early withdrawals.
9. Transport Fares Freeze: In a rare move, both train and bus fares won’t increase until 2027, maintaining current rates amidst typical inflation rises.
Additionally, a freeze on income tax thresholds until 2031 means young workers will be taxed more heavily as they cross income limits quicker than before. The Budget raises complex questions about initiatives aimed at young adults, highlighting both potential opportunities and looming pitfalls.