‘You question whether working more means losing more’

For Brett and Maria MacDonald, the cost of living has been biting this year, from rising mortgage payments to childcare fees. Living in London with two young children and no extended family nearby, the pair are juggling work with parenting.

“We opened a hair salon, Cult Hairdressing, last December,” says Brett, who grew up in Australia and met his wife in Russia before they both moved to the UK. “We have a service charge [related to the salon] that was 50% higher than we expected,” Brett says, adding that business rates are costly, as well as VAT. “I am taking a minimum salary to keep the business numbers adding up and keep our promise to investors.”

Brett earns £12,000 a year, and Maria takes home £70,000 but can earn up to £50,000 in bonuses as a sales director for a tech company. She recently got a £5,000 bonus, which led to an alert from HMRC that she might be nearing the £100,000 tax threshold, when the family would no longer qualify for free funded hours they now use for their oldest son’s childcare. “You start questioning whether working more actually means losing more,” she says.

To keep childcare costs manageable, Brett and Maria, who are parents to two sons aged three and one, carefully structure their week. They employ a nanny for their younger son three days a week from 9am to 3pm, keeping the hours intentionally short to save money. Their eldest attends a childcare provider in Epping Forest because, as Brett says: It’s cheaper to take him there than the nurseries in South Woodford or Wanstead.”

Maria was relieved there were no changes to childcare policies, but far less happy that tax bands have been frozen again. She feels it is “super punishing” when she receives a bonus, as “40% will be paid in tax, on top of losing child support” if she earns more than £100,000.

Maria describes the lower tax rates for 750,000 retail, hospitality and leisure properties as “extremely positive”, but says she needs to look into the criteria for this support.

Brett says the family are “struggling to save but not just that we are also struggling to pay the bills and put food on the table.” The pair are committed to staying in the UK, however, and making it work.

Maria says: “We just wish the system were a little more efficient. We’ve always worked, employed people and paid our taxes, but the pressure keeps mounting, and it feels like we’re getting very little back for everything we put in.” SM

‘Some other countries look at tax breaks for younger people’

Alex, 24, from Calderdale, Yorkshire, graduated this summer from the University of Manchester with a first-class degree in politics and Chinese. His goal has always been to use his language skills to strengthen the UK’s understanding of China, whether through diplomacy, government, business or intelligence work.

But Alex has found the graduate job market hard, saying there are lots of hurdles to jump through. The civil service fast stream, and most public sector recruitment, filters applicants through behaviour-based questionnaires before anyone even sees their CV. “You never get in front of a person,” Alex says. “You don’t get a chance to show what you can do.”

His friends are facing the same struggle. “When I worked in retail, most colleagues were fresh graduates who couldn’t get anything in their field,” Alex says. “The only people doing well were those who graduated years ago and did master’s degrees.”

Alex is living with his parents in Hebden Bridge because he cannot find a job that would allow him to move out. “Owning a property feels impossible,” he says. “Even renting is out of reach unless I move somewhere really deprived but then there are no jobs. Everything in this country is so centralised around London, Oxford and Cambridge.”

He says the budget did not “speak” to him “as a young person” and it didn’t seem to be a “budget for the long term”. Alex adds: “I would have liked more concrete funding for public transport and also towards the NHS.” He adds that the government needs to address student and university loan issues, saying he cannot afford funding for a postgraduate degree. He says, overall, he feels “let down by the budget”.

Alex says that the government should help by improving transport links for those living outside London. “Young people can’t afford to commute, can’t afford rent in cities, and learning to drive is getting more expensive. It all reinforces class barriers,” he says, adding that “some other countries look at taxation breaks for younger people”, and that elsewhere there is subsidised transport, and deliberate efforts to spread opportunities beyond capital cities. SM

‘We’re meant to be encouraging people to save more’

As he approaches his 50th birthday, Dean Harwood has been applying the “half your age” rule to his retirement saving and now invests 25% of his earnings into his pension through a salary sacrifice scheme.

The accountant wants to retire before he reaches 67 and has been paying in one quarter of his salary before income tax and national insurance (NI) are taken off his gross pay. His employer contributes an additional 3% to his pension.

Before the announced changes in the budget, these schemes worked for employees and employers, who did not have to pay NI on the money sacrificed. But from April 2029 there will be a threshold of £2,000 introduced, after which salary-sacrificed contributions will still be subject to NI.

Harwood says the move is frustrating and will directly affect him, at a time when people are being encouraged to put more away for when they stop working.

“We’re meant to be encouraging people to get more informed about pensions and save more. There should be incentives to do that, not discouraging it,” says Harwood, who is based in Accrington in Lancashire.

He will lose some of the NI saving, but says he will continue to contribute to his pension through the salary sacrifice scheme.

He says that workers should be encouraged to invest in pensions so that the money can be invested in the UK economy, and worries that pensions are treated as something which can be raided when savings need to be made.

“I believe that workers should be encouraged to invest adequately in pensions to give them a comfortable and enjoyable retirement. The more engagement from workers makes more pension funds available for investment,” he says. SH

‘In later life I have used my Isa allowance’

Trevor Adams was concerned about what might happen to cash Isas in the budget – but in the end, he and many other older people have been exempted from one of the main changes to the tax-efficient savings accounts.

Speaking before the budget, he said he felt strongly that the £20,000 cash Isa allowance should not be reduced – in fact, he believed it should have been increased to keep pace with inflation, in which case it would now be somewhere between £25,000 and £30,000.

In the event, as expected, Rachel Reeves slashed the maximum amount people can put into cash Isas to £12,000 with effect from April 2027. But she surprised many by saying that those over 65 would continue to be able to save up to £20,000 in a cash Isa each year.

Adams, who is 68, says this was “a good move” for him and other over-65s. “In my particular case, at my age, nothing’s changed basically.”

Generally, Adams opens a cash Isa every year. He holds a couple with Coventry building society, plus several with other providers. He also owns some shares but does not have any stocks and shares Isas.

He could have been affected if Reeves had cut the maximum that all savers can put into cash Isas to £12,000.

“In past years I haven’t used my allowance, but in later life I have,” says Adams, who lives near Manchester airport and has two adult children.

“By putting the money into stocks and shares, you’d be potentially looking at investing it for many years. To tie it up at my age [with the risk that you might get back less than you invested] … I don’t want to do that. You don’t know what’s around the corner at my age.”

Adams, who describes himself as self-employed and loves buying and restoring classic cars in his spare time, says overall the budget was “not too bad” for him, and “more or less what people expected”. RJ

‘At the end of the month I don’t have an extra £50 to be taken’

For Kate Coyle the budget may be a tipping point: she said she may consider moving home, after Rachel Reeves imposed a 3p a mile charge on electric vehicle drivers.

Coyle, who lives with her husband in a picturesque Cotswold village near Stroud, Gloucestershire, works in the vehicle charging industry, so needs to drive a battery car.

She says she faces the prospect of paying between £300 and £600 extra a year – while Reeves left 20% VAT on electricity from the public chargers on which she relies. Meanwhile, fuel duty on petrol and diesels has been frozen until September.

Her rental house for the past two years does not have parking beside the building, so she cannot use home charging, on which VAT is only 5%.

That means she has had to rely on public chargers, which are much more expensive. Charging her leased Tesla Model Y on public rapid chargers can cost up to £40 for between 280 and 300 miles of range. That is on top of the £400-a-month leasing cost, plus insurance, which has also increased.

“At the end of the month I don’t have an extra £50 to be taken,” she says. “When you apply the EV pay-per-mile to people in the basic tax bracket, I can’t see how people are going to do that.”

Coyle has just started a new job after four financially uneven years running a startup that rated public chargers.

Her new employer, 3ti, which installs car park chargers linked to solar panels, offers more stability and a salary that she said puts her in the higher-rate tax bracket, meaning above £50,271. Employees can lease cars through salary sacrifice – meaning the costs of the lease come out of her gross pay, before income tax. But public charging costs are a key issue.

“I’ve lived here for two years,” she says. “It kind of confirms to me that I probably should consider a house move.” JJ