why we have the budget.

I’ve always wanted to know: why we have the Budget

The annual Budget’s clearly a big deal, but why do we have it and why should it matter to you?

Even if you try and avoid financial news, it’s almost impossible to ignore the Budget announcement which dominates headlines every spring.

But why do we have the Budget? In a nutshell, it’s when the government explains how the country will raise and spend its cash over the coming year.

What’s included in the Budget?

There are 3 main parts:

  • Spending announcements: How public money will be used in the coming year.
  • Tax changes: Alterations to income tax thresholds plus increases and decreases in tax on items such as fuel, alcohol and tobacco.
  • Economic outlook: How the UK is performing against targets such as debt reduction and predictions for the future.

Why should you care?

Put simply, the Budget will have a direct impact on the money in your bank account and your cost of living. Even seemingly small announcements can have a surprisingly big impact on your wallet.

An increase in fuel duty will mean you pay more at petrol pumps, while changes to the personal tax threshold could mean you see more money in your pay cheque each month.

How much it affects you will depend on your personal circumstances – stamp duty changes will only have an impact if you are planning to buy a property, for example – but there’s normally at least one item which will have a direct impact on your finances.

Did you know?

  • The Queen is the first person to hear the Budget and typically invites the Chancellor to dinner the day before.
  • The Chancellor is allowed to drink alcohol while delivering the Budget. Although George Osborne only opted for water in 2015, past chancellors have opted for a cheeky tipple, with whiskey, G&T and more unusually sherry with a beaten egg all being drunk.
  • The Budget has been carried to Parliament in a red briefcase since 1860, although Gordon Brown had a new one made in 1997 as the old one was looking a bit scruffy.
  • The Budget can be however long the Chancellor wants. In 1867 Benjamin Disraeli finished his in just 45 minutes – significantly shorter than Gladstone’s 4 hours 45 minutes in 1853.

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