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What the Autumn Budget Could mean for Teachers' Finances

What the Autumn Budget Could mean for Teachers' Finances

In October 2018, Chancellor Philip Hammond set out his autumn statement. We look at some of the key announcements that may affect teachers, as well as some other recent changes that may impact your finances.

Taxes and pay
From April 2019 the Personal Allowance (the amount you can earn before paying any income tax) will increase from £11,850 to £12,500.

This will be welcomed by teachers who have been subject to a 1% pay rise cap over recent years. This pay cap was lifted earlier in 2018 for teachers in England and Wales now in line for wage increases of between 1.5%-3.5%. For teachers on the main pay range this will be worth between £800 and £1,366 per year.

In England, the higher rate tax threshold will also increase from its current rate of £46,350 to £50,000.

Both the Personal Allowance and the higher rate tax threshold will be indexed against inflation from 2021/22.

Pensions
The lifetime allowance (the maximum that you and/or your employer can contribute towards your pension before incurring a tax charge) will increase in line with the Consumer Price Index (CPI) of 2.4% (for 2019/20) to £1,055,000.

Pensions are a significant part of retirement income planning. 33% of teachers we surveyed in July 2018 told us they were planning to retire between the ages of 55-591. 55% identified 'financial security' as having the biggest influence over when they planned to retire2.

80% also said they were unsure which section of the Teachers' Pension Scheme they were a member of3.

If you have questions about your retirement plans, you can arrange a no-obligation review with your local Wesleyan Financial Services Consultant who's specially trained to understand teachers' pay, and pension benefits.

Health and social care
The Chancellor pledged a £20.5bn real terms increase for the NHS in England over next five years and funding for mental health services will grow as a share of this overall NHS budget. The aim is to ensure that people with mental illness can return to, and stay in, employment. 

Research, commissioned by the charity Education Support Partnership, found that 67% of teachers in the UK describe themselves as 'stressed' - rising to 80% amongst senior leaders (Teacher Wellbeing Index, 2018).

One of the most important factors when selecting an income protection plan is the experience of your selected provider in handling and paying claims. In 2017, Wesleyan paid out 97.8% of the claims made by our clients for personal income protection benefits, amounting to nearly £26m.

Stamp duty land tax and housing
All first-time buyers of shared ownership properties in England and Northern Ireland (with a value of up to £500,000) will benefit from the removal of stamp duty. This will be applied retrospectively to anybody purchasing such a property since the last budget on 22 November 2017.

£500m was also announced for the Housing Infrastructure Fund, to help build 650,000 homes.

Did you know that your professional status as a teacher could be an advantage when it comes to making a mortgage application? Whether you're a trainee, newly qualified, or a seasoned professional, you may be eligible for a 'professional mortgage'. Lenders offering these mortgages may take your professional status into account and potentially offer you a higher loan at a preferential rate. Qualification criteria may vary between lenders but typically includes factors such as your age, professional qualifications, or registration with an industry body.

If you have mortgage queries, speak to your Wesleyan Financial Services Consultant about how we may be able to help. We:

  • have access to lender exclusive mortgage deals
  • listen to our customers' individual needs, provide expert and impartial advice and help ensure they are guided through the entire process from start to finish
  • do not charge customers for our mortgage services. We get paid by the lender when the mortgage completes


Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Childcare
You should be aware that the Autumn Budget coincided with the deadline for new Childcare voucher entrants. These are being replaced by Tax-Free Childcare which offers working parents, who are eligible to benefit from the scheme, up to £2,000 per child, each year (£4,000 for children with a disability). 

Your Wesleyan Financial Services Consultant can help you to maximise the benefits of any savings you make through the scheme, for example, by putting any additional money you currently spend on childcare into a long-term saving or investment plan for your child's future (such as paying for university fees).

This could be particularly beneficial if you are affected by changes to salary sacrifice arrangement impacting school fee payments, introduced in the April 2017 budget. Salary sacrifice before April 2017 will remain protected for up to a year (for cars, accommodation and school fees, protection will be in place for up to four years). 

If you are in receipt of salary sacrifice benefits make sure you are aware of when any protection will end, and what this will mean for your personal finances in terms of increased outgoings (remember, the higher your tax bracket, the more you currently save under salary sacrifice).

Savings for children
The Junior ISA annual subscription limit will also increase in line with the CPI to £4,368, in the 2019/20 tax year.

The annual subscription limit for Child Trust Funds will increase in line with the CPI to £4,368 per annum, for 2019/20.

NS&I will also allow individuals other than parents and grandparents to gift Premium Bonds for children.

Savings for adults
Subscription limits for ISAs will remain unchanged at £20,000 per annum.
The minimum contribution limit for National Savings and Investments accounts (NS&I) will be reduced to £25.

Support for education providers
The Chancellor announced that 86% of schools are now rated by Ofsted as 'good' or 'outstanding' - up from 66% in 2010.  He confirmed a £400m one-off capital payment for 2018, to help schools update their equipment and facilities. This is worth an average of £10,000 per primary and £50,000 per secondary school.

Laws will be amended to ensure higher education providers in England (registered with the Office for Students in the Approved (fee cap) category) can exempt supplies of education from VAT.



1 Twitter poll of UK teachers, 4,216 responses July 2018
2 Twitter poll of UK teachers, 2,479 responses July 2018
3 Twitter poll of UK teachers, 2,495 responses July 2018

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