Why the Chancellor's Budget treats could leave a bitter taste: Sarah Coles

The biggest, stickiest confection was the 2p National Insurance cut, but when you look a bit closer, some of the details are harder to swallow. You don’t pay any National Insurance over state pension age, so this won’t ease the tax burden on pensioners, or the pressure on those who work past the age of 66. And because this tax falls more heavily on higher earners, it means the more you earn, the more this cut will save you. A higher rate taxpayer will save £754 a year, while someone on a salary of £30,000 will save £349 a year – or £29 a month.

But the least palatable part of it all is the fact that this comes alongside the freeze in the personal allowance and the higher rate tax threshold, which means pay rises have been stealthily pushing a million more people into paying tax and 800,000 into paying higher rate tax. When you factor this in, higher earners are still better off, but lower earners gain less, and those earning £19,000 a year or less will actually be worse off than they would have been without the threshold freezes or the National Insurance cut.

Jeremy Hunt’s largess also extended to parents who have fallen foul of the catchily named high income child benefit charge. This essentially means that as soon as one parent earns more than £50,099, they have to start paying back any child benefit – until it’s all paid back by the time they earn £60,000. The threshold hasn’t moved since the charge was introduced in 2013, and as a result, a quarter of families with children are affected by it.

He announced that from this April, the threshold will be raised from £50,000 to £60,000 and the top level of withdrawal will rise to £80,000 – so you’ll lose the benefit more slowly. It will leave almost half a million parents better off, but it’s worth highlighting that even after the rise the threshold won’t have kept pace with average wages.

The other problem with this charge is that it has been horribly unfair to single parents. It kicks in when either parent earns more than £50,099, so a higher earning single parent making £50,100 would be penalised, while a couple can earn £50,099 each – or a combined total of £100,198 and still keep all their child benefit. From April 2026, the rules will switch to a household basis – so single parents are no longer penalised, which will make the charge fairer.

Motorists also got a boost, with news that fuel duty will be frozen and the 5p per litre discount has been extended for another year. The squeeze at the pumps may not be as painful as it was during the highs of summer 2022. However, prices are still significantly higher than before the invasion of Ukraine, and a fuel duty hike on top would have gone down like an unleaded balloon.

There was also relatively good news on the alcohol duty rise, which has been frozen until February 2025. However, tobacco duty will rise with inflation. There will also be a consultation on a tax on vapes, to be introduced in October 2026, at which point there will a one-off rise in tobacco tax, so there is an incentive to stop smoking and switch to vapes.

For investors there was a mixed bag of announcements. There was confirmation of a NatWest share sale in the summer, but no reprieve from cuts to capital gains tax and dividend tax allowances planned for April. The capital gains tax rate cut on property will provide a small boost for property investors, but it still remains one of the least tax-efficient ways to invest. There were also hints of changes that could come further down the line, including a consultation into a British ISA, complete with an extra £5,000 allowance, and commitment to eventually introducing lifetime pension pots, which would allow you to take your pension with you when you changed jobs.

For savers, the highlight was the British Savings Bond from NS&I, which will offer a guaranteed savings rate over three years. All eyes will be on the rate available, because even savers who want to buy British with their cash will not want to accept a disappointing rate in return. A less positive development was to be found in the fine print, which revealed how much money NS&I will be charged with raising next year. Its ‘net financing target’ has been raised to £9 billion, and a hike usually means better rates for NS&I savers. However, in the current tax year, it raised more money than it expected - at £10.9 billion, so it actually needs to raise less cash next year. This is generally bad news if you are an NS&I saver, because it could mean a cut in the interest rate on savings products or a cut in the premium bond prize rate.

There was no shortage of treats handed out by the Chancellor, but there’s still a strong chance that plenty of voters will be disappointed. Pensioners will be unimpressed with the lack of tax cuts for those over the age of 66 – especially as the frozen personal allowance means so many of them are paying tax on their pension incomes. First time buyers will feel let down given that 99% mortgages disappeared without a trace – along with the rumoured cut to the Lifetime ISA penalty for those spending more than the £450,000 on a property.

The announcement also came with a helping of bad news on public spending. There will be plenty of people for whom this will be the biggest disappointment of all. It can be hard to enjoy your sweet treats when you’re worried that public spending cuts could come back to bite you.

Beware the confidence gap

Our new report into how women invest found that a fifth of women say they don’t know anything about investing, and more than half say they wouldn’t feel confident about making an investment. It’s one reason why only 16% of them have a stocks and shares ISA.

Some of this may be due to a simple lack of understanding, but when we asked the same women a series of questions about investment, a large majority of them got the answers right.

It means an awful lot of women’s reluctance to invest comes down to the confidence gap. Women often worry they don’t know enough to take the plunge, while men with the same level of knowledge may be more confident winging it.

If you’re worried about taking the first step, it can help to start with a modest regular investment, and learn as your money grows. By lowering the stakes, it feels less of a significant move, and over time your experience will naturally inspire more confidence.

SARAH COLESHead of Personal Finance and Podcast Host for Switch Your Money OnHeadline Money Expert of the YearHargreaves Lansdown