UK budget: How “you earn less you” keep shapes reactions
Guardian readers described pressure from housing and employment costs after the UK budget. A London chef said rent and bills now take about half his income…
“You earn less you” keep: a London chef says rent and bills now take about half his income, while a business owner who earned £126,000 last year says little remains at month’s end. Guardian readers described how the UK budget measures affect their finances, from saving for a first home to meeting the cost of employing people.
The accounts show different pressures behind the response to the budget. Louie, a 24-year-old chef in London, is watching a new homebuying scheme but says volatile hospitality wages make it hard to save. Graham Robinson, who runs KeySim in Greater Manchester, says higher business and household costs leave him with virtually nothing in his bank account at the end of each month.
First-home scheme meets a savings hurdle
The government’s Your First Home scheme will allow buyers to purchase a new-build property with a deposit of 2.5%, supported by an interest-free equity loan. Louie is optimistic about the plan, which he says could encourage young people to buy earlier. But a smaller deposit does not solve the problem of finding money to save while paying rent and bills.
Louie earns between £37,000 and £40,000 a year and shares a three-bedroom rented property with two friends. He says housing costs now take up about half his income, compared with the third of salary he had expected to spend on rent and bills. His landlord has told the household that rent will rise by £200 a month in November.
“I’ve found hospitality wages to be far too volatile to even consider saving for a property,” Louie said. He is studying an access course and plans to start a physiotherapy degree next year, hoping a more stable income and savings will eventually make buying possible.
He has saved some money. Since he was 18, he has put between 5% and 10% of his earnings into a stocks and shares investment account. Over the past year, he has also started making regular contributions to an Isa for a house deposit. Even so, Louie expects to wait until around his late 20s to early 30s before seriously considering a purchase.
That gap matters for the scheme’s reach. The lower deposit may help people who can manage the costs of buying but struggle to assemble a large upfront payment. Louie’s experience points to a separate obstacle: rent and bills can leave little room to save, even when a scheme reduces the deposit required.
Business owner faces wage and household bills
Robinson earned £126,000 last year, but says his income has not translated into money left at the end of the month. He had hoped the budget would offer more help with the cost of employing people. Instead, he said, the employment allowance stays at £10,500 as employers face a rising wage bill.
“The minimum wage increase is welcome for workers, but the government gets the headline, businesses get the bill and the Treasury recoups some through tax and national insurance,” Robinson said.
Robinson lives alone and shares care of his 10-year-old autistic son with his ex, while covering all childcare costs himself. He said his monthly income after tax is broadly £6,500. Mortgage payments have risen from about £900 a month to £1,300, and he said council tax, food, energy and other everyday expenses have also increased.
He normally earns approximately £100,000 a year and has increasingly relied on additional dividends from KeySim to cover rising costs. Robinson is frustrated by the effective 60% income tax rate on earnings as the personal allowance is gradually withdrawn on income over £100,000. It reaches zero when earnings reach £125,140.
“To put an extra £1,000 a month in my take-home pay, my salary would need to rise from £100,000 to £129,757 a year,” Robinson said.
Source: theguardian.com
