Rishi Sunak, the Chancellor of the Exchequer, is set to reveal his new budget for the 2022 – 2023 tax year this week.
Many of the budget’s contents – such as an increase in the minimum wage and an increase in national insurance – have already been revealed or leaked, but there will still likely be some surprises on Wednesday.
Chancellors and governments like to trail their announcements in the days ahead of their budget as it allows them to set the narrative on the tone they desire, while burying any bad news for the speech to parliament on the day.
Here, we run through all the announcements made so far and how they’ll affect us, the public.
Budget 2021: biggest announcements so far
Both the national minimum wage and the confusingly-named national living wage – which is essentially the minimum wage for those aged 23 and over – are to be increased, the chancellor has revealed.
The living wage will go from £8.91 per hour to £9.50, a rise of 59p (6.6%). For those aged 21 and 22, the minimum wage will rise from £8.36 an hour to £9.18, while the figure for apprentices will go from £4.30 to £4.81 per hour.
An increase in national insurance contributions – both for employers and employees – was announced in September. Workers and their employers will each have to pay an extra 1.25% from April 2022.
The move is controversial, not least because the burden of the rise will fall on young people and lower-paid workers, while those who benefit will be older and those with thousands of pounds in assets, who will need to pay less towards their care.
It is also controversial for breaking the Conservatives‘ pledge from the 2019 general election that they would not raise national insurance, VAT, or income tax if elected
Family hubs and support
According to the Guardian, 75 local authorities will be given funding to set up “family hubs” – one-stop-shops for people to go to for advice and guidance.
They have been compared to the Sure Start centres that were set up by Tony Blair’s Labour government – and then shut down during David Cameron’s time as the Conservative prime minister.
The Treasury has reportedly committed £82 million to the plan, in addition to £100m for supporting mental health of new parents, £50m for breastfeeding support and antenatal classes, and £200m for helping vulnerable families who face complex issues.
At least some of this funding is not actually new; parts of it have been recycled from previous announcements or shifted from separate budgets.
Freeze on the personal allowance on income tax
Income tax’s personal allowance – the amount for which we can earn tax-free before having to pay tax on the rest – is to be frozen at £12,570 until 2026. While this may sound inconsequential, it means that, with inflation, we will all end up paying more tax.
The higher rate threshold – the point at which one must start paying the higher rate of 40% tax – is also staying put for five years at its present level of £50,270.
This was all previously announced, and the figures won’t change from 2021 levels, but the freeze technically begins in 2022.
NHS backlog fund
With the NHS buckling under the strain of a decade of austerity and now coronavirus, the Treasury has offered the organisation a one-off outlay of £2.3 billion to set up a network of community diagnostic centres. These hubs will provide rapid access to scans and tests.
A further £1.5bn will go towards creating surgical hubs in hospitals to clear surgery waiting lists, while £2.1bn has been set aside to improve IT systems and digitise patient records.
Fund for attracting foreign investment
The Guardian also reports on plans for a £1.4 billion fund to attract new investment in to the UK. The scheme will provide grants to international companies with “strategically important” investment proposals in the UK.
New house-building tax
The Times reported last month that the chancellor was planning to introduce a new tax on housebuilders with profits over £25 million. In addition, the government wants to tax profits made on land that has secured planning permission – even if no homes have actually been built.
The tax is apparently designed with two intentions: the first is to stop developers from stockpiling land to keep supply low and hence prices high; the second is to raise money to help pay for the cladding scandal.
The tax is expected to raise £2 billion over the next decade. The cladding scandal, however, could cost £15 billion.
The tax is currently in the consultation phase and could be included in this week’s budget.
Just under £7 billion is to be set aside for new transport investment outside London, with the west of England potentially in line to benefit from the fund, which will be shared around England and could be spent on new bus, rail, tram, or cycle networks.
There are reports emerging that Sunak will commit £1 billion to help the court system clear the backlog from the pandemic, when many trials and cases were cancelled or postponed. Details are, so far, thin on the ground.
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