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TaxScouts guide to the Rishi Sunak budget

  • 4 min read
  • 28 Oct 2021
Rishi Sunak budget breakdown

Watched the Rishi Sunak budget this week and wondered what the heck it all meant? Don’t panic. We’ve got you covered. As you know, demystifying the mysterious world of tax and personal finance is our middle name. (Sure, it’s a longwinded middle name…)

We’ve broken down the budget into 7 main highlights. Scroll down to read how you could be impacted.

1. Rise to minimum wage

In the Rishi Sunak budget, the minimum wage is set to go up by 6.6% to £9.50 per hour. 

It will come into effect on 6th April next year i.e. the start of the 2022/23 tax year. The 59p per hour increase means that if you’re earning the minimum wage, you’ll see more than as £1,000 increase in your yearly earnings 🤑

However it’s not all plain sailing. The wage increase may cause a reduction in benefits for lower-income families, potentially losing their eligibility as a result of higher yearly earnings. And this may have a serious impact with the rise in the living costs (e.g. the recent rise in gas and electric bills). 

WHEN: from 6th April 2022

2. Health and Social Care Levy

Announced back in September, we’ll be seeing a new tax hit at the start of the 2022/23 tax year. The Health and Social Care Levy aims to raise money to boost the recovery of the NHS after the pandemic. It will be a 1.25% rise in National Insurance, affecting employers, the self-employed and employees. 

The levy also affects the tax on dividends, adding 1.25% to the current rates. For more information on the Health and Social Care Levy, check out our blog on the topic. Click the button below to read all about it! 

Read more

3. An end to the public sector pay freeze

Following the “temporary pause” in salary increases for public sector workers that the government introduced last September, in the Rishi Sunak budget, he declared this freeze has lifted. Hurrah! Up to 5 million public sector workers can expect to see a wage increase from 2022. 

WHEN: from 6th April 2022

4. A generation of mathematicians 

A reported £1,600 per year in earnings is lost as a result of poor numeracy skills. In fact, Rishi claimed that millions of adults in the country have maths skills lower than that of a nine year old. As a result of this, the government is looking to introduce a UK-wide programme to improve basic maths skills. 

5. Universal Credit taper reduction

Universal credit is a state-provided benefit that you can claim if you’re over 18 and either out of work or not earning enough to live on.

Currently, this is what you get:

  • £257.33 a month for single claimants 👉 under 25
  • £324.84 a month for single claimants 👉  25 and over
  • £403.93 a month for joint claimants 👉  both under 25
  • £509.91 a month for joint claimants 👉  both 25 or over

But these figures go down when you start earning over a certain threshold. This reduction is known as the universal credit taper. At the moment, the taper is 63p – you lose 63p of the benefit for every £1 you earn over the threshold.

This taper rate is going down to 55p, meaning that you technically get to keep more of your income as you earn more. That said, the rise in minimum wage may dull this benefit. 

WHEN: by 1st December 2021

6. The cost of a pint

With the higher wages and rise in energy costs, the price of a pint looks like it might be on the rise again 🤯  Pub landlords warn that it could be going up by roughly 30p to meet the increase in their outgoings. 

In addition to this, higher strength drinks will also rise in price from February 2023, but there will be a reduction in the cost of draught beer and sparkling wine. Swings and roundabouts, hey?

WHEN: ⬆️ from 6th April 2022; ⬇️ by February 2023

7. Discounts for retail, hospitality and leisure

As part of the plan to boost the industries most impacted by the pandemic, Rishi announced a 50% discount to business rates for those in the retail, hospitality and leisure sectors. Business rates are a tax that you have to pay on top of council tax for the premises you operate from. The change will be introduced at the start of the 2022/23 tax year (6th April 2022).

The maximum amount you’ll be able to benefit is a £110,000 discount. 

WHEN: from 6th April 2022

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