The new chancellor Rishi Sunak has delivered his first ever budget, characterized by an increase in cigarette prices, wage changes and new minimum wages.
They arrived a few hours after the Bank of England reduced interest rates to 0.25% in an attempt to help support the economy following the outbreak of the coronavirus.
The budget is the Treasury’s ability to provide the nation with a vision of how the economy is doing, where the government will spend the money it collects and what changes it is making to the way we are taxed.
In essence, it’s the government’s way of telling you how it will spend your money on a Brexit post in Britain.
In his first delivery as new chancellor, Sunak presented a series of new measures to help Britain deal with the current coronavirus crisis.
“This is the government that does things,” said Sunak, opening his speech.
Speaking of the bug killer, he said the government will do “everything it can do to support the economy.”
National insurance contributions, pensions and potholes have also been mentioned as part of plans to improve living conditions, roads and other services.
Updates were also provided on fuel tax, personal tax allowance, national living wages and taxes on alcohol and cigarettes.
But what does it all mean for your money? Here is our guide to the impact on your bank balance.
Safety for workers during the coronavirus epidemic
“The prime minister has already announced compulsory sick pay from day one, not four,” said Sunak.
“But we can go further.
“We must provide security and support to those who fall ill and are unable to work. We will give everyone a safety net,” he said.
Under the new rules, sick pay will be mandatory for all those who are advised to insulate themselves, even if they have not presented any symptoms.
Sick notes will also be available by contacting 111, which means workers will not have to visit their family doctor or hospital.
However, five million self-employed workers and at least 1.5 million low-income Brits who fall below these earnings are still not eligible for sick pay.
For self-employed workers, the government will accelerate benefits to help them during the crisis period.
Those who benefit from a hiring and support contribution allowance will be able to apply for financial aid from the first day instead of the eighth day.
The government is also easing the obligation for anyone to physically attend the work center during the coronavirus epidemic. If you are not feeling well, you can stay in touch using your online portal instead.
For employers with fewer than 250 employees, the government has said it will reimburse sickness wages for up to 14 days.
“I am also creating a £ 500 million trouble fund for local authorities to support vulnerable people in their local area,” concluded the chancellor.
National insurance contributions
About 31 million working Britons will have a £ 104 tax reduction thanks to the measures confirmed in the budget.
Employees will see their wages go home thanks to a new national insurance threshold in April.
It means that 12% national insurance deductions from wages will not apply to the first £ 9,500 you earn every year – up from £ 8,632 at the moment.
People who pay the lower rate charged to British self-employed workers will not save much because of the changes, but will still pay £ 78 less in taxes.
Steven Cameron, director of Aegon’s pensions, said: “Confirming that the government is raising the threshold for when national insurance becomes payable at £ 9,500 is good news, saving 31 million people across the UK up to £ 104 per year. This means that those who earn under £ 9,500 will not pay any national insurance. “
All other thresholds for the 2020-21 period will also rise with inflation, with the exception of higher national insurance contribution thresholds which will remain frozen at £ 50,000, as announced in the 2018 budget.
“What is doubly welcome is the confirmation that those who have been excluded from paying national insurance will not lose their state pension credits,” said Cameron.
“This is important because people need at least 10 years of credits to receive a state pension and 35 years to receive the full state pension which is expected to rise to £ 175.20 a week by April.
“Without this provision, people could have made money by paying less NI today just to suffer from a reduced state pension in the future.”
New minimum wages
New minimum wages since April 2020
As of April 1, 2020, over two million people will receive a salary increase thanks to the increase in the minimum wage for all workers with a base rate.
Next month, the National Living Wage (NLW) – the rate for over 25 years – will rise from £ 8.21 to £ 8.72 per hour, marking a 6.2% increase.
Apprentices and all other base rate workers over the age of 16 will be affected by the change taking place on April 1st.
Rates, set by the Low Pay Commission, are equivalent to a £ 930 increase over the year for a full-time worker aged 25 or over.
Younger workers who receive the national minimum wage will also see their wages increase with increases of between 4.6% and 6.5%, depending on their age, with 21-24 years of age seeing an increase of 6.5 % from £ 7.70 to £ 8.20 per hour.
“Today we are also publishing a new mandate for the independent commission for low wages. By 2024 the national wages will live to reach two thirds of median earnings, reaching £ 10.50 an hour,” Sunak explained.
Buffer fee to be permanently eliminated
The government has confirmed that it will abolish the 5% VAT charged on women’s health products with a zero VAT rate from the beginning of next year.
The Treasury estimates that the move will save the average woman by nearly £ 40 over the course of her life, with a cut of 7 p on a pack of 20 swabs and 5 p on 12 pads.
Women’s Resource Center CEO Vivienne Hayes told Mirror she was “on cloud nine” with the proposed change, but called on Boris Johnson to “repay the swab tax”.
He said: “Tampons and sanitary towels were never luxury items and should never have been subject to VAT.
“We now want to see the 700 million pounds raised through this tax paid back to women’s charities as promised.”
Frozen fuel, beer, wine and cider
There will be no duty increases paid on fuel or selected alcoholic beverages, the chancellor announced today.
Beer Duty collects a whopping £ 3.4 billion a year for the Treasury, four times more than any other European nation.
In Britain, pub goers pay 54 p of Beer Duty for each pint purchased. In Spain, you would pay only 5 p for the same drink.
Sunak said to the municipalities: “Pubs are at the center of community life but too many have closed in the past ten years.
“Just for the second time in nearly 20 years, every single one of our alcoholic drinks will be frozen,” he said.
Sunak also announced today that the discount on commercial pub fares will increase from £ 1,000 to £ 5,000, protecting many from closing.
The move was welcomed by pub groups and beer, wine and spirits producers.
“This is fantastic news for drinkers and pubs up and down the UK, and for all industry players who put so much passion into great British beer, .Cider & Pubs. Greetings Chancellor!”
Duty on frozen fuel
The fuel will also be frozen for the tenth year – a freeze that the Prime Minister has pledged to protect in his party manifesto.
Sunak has revealed that the rate will remain at 58 p / liter for petrol and diesel.
He said to the municipalities: “I have heard statements that after nine years of freezing, at the cost of £ 110 billion for the taxpayer, we can no longer afford to freeze the duties on fuel.
“I am certainly aware of the tax cost and environmental impacts.
“But I am making significant progress in this budget to encourage cleaner forms of transportation and many people still rely on their cars.
“So I’m happy to announce today that fuel taxes will remain frozen for another year. Compared to 2010 plans, it’s a saving of £ 1,200.”
RAC policy chief Nicholas Lyes said: “We welcome the freezing of the Chancellor in fuel tax which will be a relief for drivers up and down the country.
“While the Chancellor might have been tempted to increase the duty, the reality is that for millions this would have simply increased everyday driving costs and would have done nothing to encourage them to move to cleaner vehicles.
“And while many want to look for alternative transport options to using their vehicles for some trips, in so many parts of the country there is no reasonable public transport supply.”
Tax on e-books to be abolished
The government will abolish taxes on e-books, eliminating 20% of the retail price from December 1st.
It means that electronic books, electronic journals, electronic journals and academic journals are entitled to the same VAT treatment as their physical counterparts, which are currently exempt from the levy.
The new rules should benefit all those who read digitally on Kindles, including children of poorer backgrounds.
Current figures show that nearly one in four pupils at free school meals read digital fiction, compared to one in six of their peers who are not entitled to free school meals.
Huge increase in prices for smokers
Beer, wine and cider prices have been reduced under the Chancellor’s new rules, however cigarette prices will rise almost immediately.
The duty rates on tobacco will increase on Wednesday at 18:00, the government confirmed.
Hidden in the small print of Budget 2020 speech by new Chancellor Rishi Sunak, he revealed that prices will rise up to 6% across the board.
Duty rates on all tobacco products will increase by 2% starting on Wednesday, while this year the rate on manual rolling tobacco will increase by 6%.
These changes will take effect from 18:00 on 11 March 2020.
The ban on menthol and flavored cigarettes will follow as of May this year as part of plans to reduce social smoking.