Rishi Sunak’s Latest UK Budget Announcement
By: Fatmir, redwigwam
Chancellor Rishi Sunak unveiled the contents of his latest Budget in the House of Commons.
Sunak released the government’s proposed tax and spending plans for the upcoming year.
Plans will focus on what’s necessary for the “post-Covid era.”
These budget guidelines are critical because they will pave the way for what he calls an “economy of higher wages, higher skills, and rising productivity.”
How will these budget plans affect personal finances?
Here’s a summary of the key measures in his plan.
Changes in Taxation:
- Significant tax changes will raise national insurance rates to fund social care. While this is worthy of mention, it was barely noted in the chancellor’s speech.
- Beginning in April 2022, tax rates will increase by 1.25% for employed and self-employed workers who earn more than £9,568. Similar increases will impact national insurance rates, and higher rates will apply to workers who are employed beyond their state pension age.
- The Treasury will initiate an increase in dividend taxes by 1.25% beginning in April 2022.
- Among items not mentioned were increases in capital gains taxes and major tax requirements for self-employed workers. The Chancellor mentioned last year that self-employed workers would have to contribute their fair share to support pandemic initiatives, but this was not brought up again.
Changes in Employment:
Sunak delivered critical information on minimum wage increases and benefit cuts during the budget announcement.
The Chancellor will increase expenditures to help those in financial distress.
Universal Credit will provide families with an additional £2 billion. Sunak stated that, “We will always give people the support they need and the tools to build a better life for themselves. And levelling up.”
These welcome changes include the following details:
- The Chancellor promised pay raises across the board.
- The National Minimum Wage will increase to £9.50 from next April. This is an increase of 59p per hour worked - and the equivalent of £1000 a year if you work full-time.
- This effect on inflation is unknown currently.
- Minimum wage for those aged 21-22 will increase from £8.36 to £9.18 an hour. Apprentice rates will also increase, from £4.30 to £4.81 an hour.
- The Universal Credit taper will be cut for millions of working families. It is currently at 63%, which means it reduces UC by 63 pence for every pound earned above a defined threshold.
- The Chancellor promised to reduce this to 55% by 1st December 2021 while increasing work allowances by £500.
- It is estimated that 2 million working families will be better off by £1,000 annually.
Changes in Cost of Living
- Fuel duties are cancelled, as petrol prices increase. The chancellor claims this will save £15 when filling the tank of the average car.
- No additional measures were identified to help households living on the edge and dealing with higher fuel bills this winter.
- Taxes will be reduced on alcohol duties, including sparkling wine, fruit ciders, and draught beer.
- The Chancellor also promised to help British pubs, although wage increases may increase overhead as much as 30 pence to the cost of a pint of beer.
Observations from our CEO, Lorna Davidson
She was excited to hear the positive feedback provided by the Chancellor, especially on UK’s economic growth moving forward.
She noted that financial assistance for those needing help is always welcome.
Among the points that Lorna observed are the following:
- We can’t ignore we are in the middle of historic staffing and supply shortages that threaten prolonged impacts for workers and businesses.
- The UK needs an injection of qualified workers in many sectors, including critical shortages in transportation and hospitality. This month, over 1 million jobs remain open and available, which is critical.
- redwigwam, the UK’s largest staffing platform, has immediate needs to fill over 1,700 positions, so upskilling, technology, and salary opportunities are welcome right now.
- Staff training is also important for workforce development, flexible staffing, and positive treatment of workers.
- This will create greater job opportunities and long-term staffing solutions.
Lorna also noted that the Chancellor should look toward boosting employment efforts, salaries, and public finances to build a picture of sustainable growth.
“Businesses should be left alone in terms of fees and additional taxation, especially while cashflows are in trouble with many employers. The right approach should be to encourage worker upskilling, better business management, and introducing new technologies whenever possible. This will create a valuable workforce and help the economy offer greater opportunities for growth. The government needs to work with businesses at the national and local levels for changes to be effective. ”
Lorna Davidson, CEO, redwigwam
Lorna firmly believes exciting times are ahead, but we must be prepared for changes to exit the pandemic, and Brexit, stronger than ever.