The latest interest rates, trade news and the low down on Child Benefit for teenagers
Today we are talking interest rates and how the new UK/US trade deal could affect your business. If you’ve got teenagers, you’ll also need to take action if you receive Child Benefit, as your child’s next steps could impact any future payments.
Interest Rates Cut, Trade Talks Shift – What It Means for Your Business
In the last couple of weeks, the Bank of England cut interest rates from 4.5% to 4.25%, and a new ‘trade deal’ was announced between the UK and the US. Let’s see what these news items can tell us about the latest developments in the economy.
Split opinions
At its meeting to discuss the Bank Base Rate, the Monetary Policy Committee (MPC) voted by a majority of 5-4 to reduce it to 4.25%. Two of the opposing members voted for reducing the rate to 4.0%, while the remaining two voted for keeping the rate at 4.5%.
This represents a wide range of opinion, which is perhaps to be expected given the uncertainty both domestically and globally in recent months. It could suggest that your guess is as good as ours on what direction the economy will take in the coming months.
Inflation and growth
At 2.6% in March, inflation is still above the Bank’s target of 2%. It was, however, a reduction from 2.8% in February and so is a step in the right direction.
Most tellingly, though, the MPC noted that this was close to their expectations in February. Perhaps this gives them added confidence in their predictions of how inflation is going to develop over the medium term.
The Bank believes that inflation will increase to 3.5% between July and September because of energy costs. However, the committee believes that inflation will fall back after that.
The latest growth figures showed 0.7% growth in the January-to-March period, stronger than the 0.6% that had been forecast. Critics point out that the period excludes the effects of the Chancellor’s increase in employers’ National Insurance Contributions.
This may mean that we should not expect big cuts to the base rate in the rest of 2025.
Trade news: Progress, but no big breakthrough
Just as the Bank was cutting rates, the UK government struck a limited tariff deal with the United States. This isn’t a full trade deal (despite some headlines), but it does make it easier to sell certain goods to the US – like cars, steel and aluminium.
It’s a step in the right direction, especially for manufacturers, but there are still a lot of loose ends. Many businesses won’t see immediate changes, and the finer details – especially around quotas and product rules – still need to be worked out.
What does this mean for business owners?
You might be wondering how all this affects you and your business day to day. Here’s the takeaway:
- Borrowing costs may ease a little. If you have loans or overdrafts tied to the base rate, the interest may drop slightly. But banks don’t always pass on the full cut straight away.
- Exporters may see new opportunities, particularly in manufacturing. If you’re selling to the US or considering it, this new tariff agreement could make a difference. But you may need to await the fine print – limits and paperwork still apply.
- Consumer confidence could improve. If the cost of borrowing continues to fall and inflation keeps steady, shoppers may feel a bit more comfortable spending again.
- Keep an eye on costs and planning. The economy is still unpredictable. While interest rates are lower, energy costs and trade uncertainties mean it’s still worth budgeting cautiously.
A balancing act
The interest rate cut shows that the Bank believes inflation is under better control. However, they remain cautious about what will happen over the coming months.
So, while this may be a small bit of good news, the message is clear: we’re not out of the woods yet.
Don’t Miss Out: Parents of Teenagers Need to Extend Child Benefit by 31 August
If you’re a parent of a 16 to 19-year-old who’s staying in full-time education or training, HM Revenue and Customs (HMRC) is reminding families to extend their Child Benefit claim by 31 August to avoid the payments stopping altogether.
Why it matters
Child Benefit is worth up to £1,354.60 per year for your first child and £897 for each additional child. It’s a welcome boost for many families, but it won’t continue automatically once your child turns 16. Unless you confirm they’re still in approved education or training, payments will stop at the end of August following their 16th birthday.
With many teens finishing GCSEs this summer, now is the time to get this sorted.
How to extend your claim
It’s quick and easy to extend your Child Benefit online or via the HMRC app. If you’re eligible, you don’t need to wait for anything from HMRC, you can do it today. Alternatively, HMRC is sending out reminder letters between May and July that include a QR code to take you straight to the right page on GOV.UK.
What counts as approved education or training?
You’ll still qualify if your child is studying full-time in non-advanced education (like A-levels, NVQs up to level 3 or home education), or attending approved unpaid training. It doesn’t count if the course is part of a job contract.
Are you an employer? Here’s what to keep in mind
If you employ parents of older teenagers, this reminder might be helpful to share. It’s also worth being aware of changes coming for those affected by the High-Income Child Benefit Charge.
From this summer, families can now opt to pay this charge through their PAYE tax code instead of filing a Self Assessment return, a move designed to cut paperwork. This might reduce admin for some of your employees. You’ll just need to look out for any updates to their tax code for payroll processing.
What about families who opted out of Child Benefit?
If someone in your team previously opted out because of the High-Income Charge, it’s now easier to opt back in if circumstances have changed. They can restart payments through the app or website.
And don’t forget Child Trust Funds
If your teenager has recently turned 16, they can take control of their Child Trust Fund, which could be worth thousands of pounds. They’ll be able to withdraw the money once they turn 18. If they’re not sure where it’s held, there’s a free online tool to track it down on GOV.UK.
Next steps
- Parents: If your child is staying in education or training, log in to the HMRC app or GOV.UK to extend your Child Benefit claim before 31 August.
- Employers: Consider sharing this information with staff or including it in internal communications, especially for those balancing work and parenting teens.
- High-income families: Check if the new digital option for paying the Child Benefit Charge via PAYE could save you time.
As always, if you have questions or aren’t sure how this might affect your personal or business situation, feel free to get in touch.
See: https://www.gov.uk/government/news/parents-of-teens-reminded-to-extend-child-benefit-claim-online