Five ways the Budget will affect you if you are under 25

Published1 hour ago

Tax and spending decisions by the government may feel distant to your everyday life, but many of the Budget announcements will have a direct impact on you and your money.

Here are five ways the Budget will affect you if you are under-25.

Minimum wage rise

If you are an 18-to-20 year-old earning the minimum wage, your pay will go up by 3.9% from next April.

Despite the increase, this may be a lower rise than you had expected. That is because Healey reversed course on how his Labour predecessor, Rachel Reeves, had been uprating the minimum wage for young people.

Labour had promised to do away with "discriminatory age bands", which would have equalised the minimum wage for everyone over 18. This year, 18-20 year-olds will see the same increase as older workers, meaning the disparity will remain. So for 18-to-20 year-olds, your pay will rise to £11.27, while over-20s will be paid a minimum of £13.21 an hour.

Incredibly, the increase also means a 21-year-old working full time on the minimum wage who took out a student loan after 2023 will earn enough to meet the £25,000 repayment threshold, over which they will start paying back 9% of their earnings, as noted by economist Ben Zaranko.

First-time buyer boost

The Budget contained plans to help people get onto the housing ladder, including the introduction of a "First Time Buyer Isa". This is an account in which savers can build up a deposit, with the government topping up contributions of up to £4,000 each year with a 25% bonus.

The new savings account will be introduced in 2029, replacing the existing Lifetime Isa, which has been criticised by some for imposing harsh penalties on those buying homes for more than the £450,000 cap.

The cap will remain, but the new "First Time Buyer Isa" will ensure savers are not penalised by losing their own money when making withdrawals. The penalty for withdrawals from existing Lifetime Isas will be lowered, too, to address concerns about savers being punished.

The government had already revealed a £4.7bn scheme for first-time buyers in England dubbed Your First Home. It is aiming to help 70,000 individuals and couples get on the housing ladder

The scheme will allow people to buy a new-build home with a deposit of 2.5%. It will provide them with a loan worth 20% of their property's value to help pay for the purchase.

Capped at £110,000 outside London and £140,000 in the capital, it is aimed at those hoping to get on the housing ladder without help from "the bank of mum and dad".

Chris Mason: Budget felt cautious despite its range of small measures

• Published3 hours ago

Chris Mason: Budget felt cautious despite its range of small measures

Published3 hours ago

Your pay, energy bills and savings: How the Budget affects you

• Published3 hours ago

Your pay, energy bills and savings: How the Budget affects you

Published3 hours ago

No help yet on jobs

If you are one of more than a million 18-to-24 year-olds not in employment, education or training (Neet), Wednesday's Budget may have been a frustrating watch.

The chancellor acknowledged the scale of the crisis facing young people, but said solutions would not come yet. Ministers are waiting on a series of recommendations from Alan Milburn, who has been looking into why so many young people are Neet in the UK.

Milburn has warned Britain is "at risk of a lost generation" due to the crisis, saying a "round of ammunition" is needed rather than a silver bullet. He will make recommendations to the government later this year.

Student loans 'under review'

Another group left hanging were those with outstanding student loans, particularly the controversial Plan 2 loans taken out between 2012 and 2023 - which many fear they will never be able to pay off.

If you have student loans, the government has said it is looking at ways to reform the repayment system. But action was not forthcoming at the Budget, despite expectations in the run up that the issue might be addressed.

After the statement, Chief Secretary to the Treasury Emma Reynolds said the loan repayment system is "under review".

"We inherited a system that is difficult and unfair on young people, but we weren't able to move on that today," she told the BBC.

Young Entrepreneurs Allowance

If you are a young person hoping to start a business in England, the Budget contained good news for you.

The chancellor wants to level the playing field for young entrepreneurs who have bright ideas, but who might not have the same family financial backing as others.

In an attempt to encourage more young people to start their own businesses, the government will pilot a "Young Entrepreneurs Allowance" in England.

The allowance will see your living costs partly covered by the government for the first year your business is operating. Healey hopes it will encourage more young people to take the plunge and become entrepreneurs.

Details of the scheme are thin at the moment, however, only that it will be rolled out "shortly".

Related topics

UK government spending

More on this story

Budget 2026: Key points at a glance

• Published3 hours ago

Budget 2026: Key points at a glance

Published3 hours ago

Healey tells departments to make 1% cuts to fund defence

• Published57 minutes ago

Healey tells departments to make 1% cuts to fund defence

Published57 minutes ago