CARERS and workers were among the winners in the Budget today – while smokers and drinkers were among the worst hit.
In her first Budget since becoming Chancellor, Rachel Reeves set out the government’s financial plan for the year including payments, tax changes and policy updates.
She also confirmed how much benefits and the state pension will rise this year.
Among the announcements was an unfreeze of income tax thresholds and increase in the number of carers who can claim a vital benefit.
Here we round up who the winners and losers are from the Budget.
Winners
Workers
The Chancellor announced today that she will not extend the freeze on income tax thresholds.
Tax thresholds usually rise each year in line with inflation but they were frozen by the previous Conservative government until 2028.
The freeze meant that as worker’s wages rose in line with inflation they were dragged into higher tax bands.
This phenomenon is called fiscal drag.
Freezing tax thresholds increases people’s taxable income without putting up tax rates.
It gives the government additional revenue.
The amount of income you do not have to pay tax on will remain at £12,570 until 2028.
Meanwhile, the basic rate of income tax will stay at 20% on between £12,571 to £50,270.
The higher rate will continue at 40% between £50,271 to £125,150 and the additional rate will remain at 45% on over £125,140.
From April 2028 these personal tax thresholds will be increased in line with inflation.
Rachel Reeves said: “I am keeping every single promise on tax that I made in our manifesto.
“So there will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government.”
More than 3 million workers will also receive a pay boost after the Chancellor confirmed that the National Living wage will increase from £11.44 to £12.21 from next April.
The 6.7% increase is worth £1,400 a year for an eligible full-time worker.
The National Minimum Wage for 12 to 20-year-olds will also rise from £8.60 to £10 an hour – the largest increase in the rate on record.
For a full-time young worker the boost will increase their pay by £2,500 next year.
The government said this marks the first step towards aligning the National Minimum Wage and National Living Wage to create a single adult wage.
Chancellor of the Exchequer Rachel Reeves said: “This Government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”
Carers
An extra 60,000 carers are also set to benefit from the Budget after the Chancellor made a key change to Carer’s Allowance this week.
Rachel Reeves raised the limit people can earn before they are no longer eligible for carers allowance from £151 to the equivalent of 16 hours at the National Living Wage.
The increase is the largest uplift in the threshold since the benefit was introduced in 1976.
Carer’s Allowance is a weekly payment which is paid to people who look after a severely disabled child or adult.
It is worth £81.90 a week, or £327.60 a month.
What is the Budget?
THE Budget is when the government outlines its plans for tax hikes, cuts and things like changes to the minimum wage.
It’s different to the Spending Review, which sets out how much public cash will go towards funding certain departments, devolved government’s and services, such as the NHS.
The Budget is read out in the House of Commons by the Chancellor of the Exchequer. It will be Rishi Sunak’s second Budget as Chancellor.
Mr Sunak’s first one in March last year has been dubbed the “coronavirus Budget” after it focused on supporting Brits financially through the crisis, rather than the government’s “levelling up” agenda as promised in the 2019 general election.
Normally, the Budget is held once a year but the unprecedented circumstances of the pandemic in 2020 saw Mr Sunak give a “mini-budget” in the Commons on July 8.
Rachel Reeves confirmed that it will rise by 4.1% next year, which will mean that carers receive £85.18 a week, £3.28 more than they currently do.
The move has been welcomed by several charities.
Helen Walker, chief executive of Carers UK, said earlier this week: “We’re delighted that this is being addressed.
“It’s been heartbreaking and frustrating to hear carers having to choose between paid work and Carer’s Allowance simply because of a rise in the National Living Wage – something that is supposed to benefit low paid workers, not put them out of work.”
WATCH RACHEL REEVES ON NEVER MIND THE BALLOTS
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves will be grilled in a special Budget edition of The Sun’s Never Mind The Ballots show today.
Our Political Editor Harry Cole will put the Chancellor on the spot shortly after she’s finished delivering her crucial address in the House of Commons.
It will be available to watch on thesun.co.uk, YouTube and Sun social channels at 5.30pm.
Topics will include her decision on whether to spare motorists a fuel duty rise, and the expected eye-watering tax rises she will impose.
Since its launch earlier this year, NMTB has cemented its place at the heart of British politics.
During the General Election campaign The Sun was the only print publisher to host back-to-back grillings of Rishi Sunak and Sir Keir Starmer.
Footage from The Election Showdown has been viewed over 15 million times.
NMTB has also featured interviews with ex-PMs Boris Johnson and Liz Truss, as well as senior politicians Nigel Farage, James Cleverly, Wes Streeting, Steve Reed and Bridget Phillipson
Home buyers
Home buyers were also rewarded in the Budget as the Government confirmed that it will deliver more affordable housing.
It announced on Saturday that it will build up to 5,000 new affordable social homes.
There will be a £500million boost for the Affordable Homes Programme, which will push up the total amount of funding to more than £5billion.
The Chancellor also confirmed a new five-year social housing rent settlement which will allow it to invest in tens of thousands of new homes.
But the Government confirmed it will not extend the current stamp duty thresholds in a blow to first-time buyers.
Stamp duty land tax is due if you buy a property or piece of land which is worth more than a certain price in England and Northern Ireland.
In 2022 the rate at which first-time buyers need to pay it was increased from £300,000 to £450,000.
A discounted rate on purchases of up to £625,000 was also brought in.
Meanwhile, it was increased from £125,000 to £250,000 for those taking a second step on the ladder.
But these thresholds will expire on March 31, 2025, at which point they’ll return to the previous levels.
A return to previous stamp duty thresholds will result in an additional 20% of first-time buyers being liable to pay stamp duty according to online property portal Zoopla.
A further 14% will be forced to pay a partial amount.
The impact will be felt across London and the South East in markets with average house prices over £425,000.
This will increase costs for buyers by an average of £5,600 in London and £1,390 in the South East.
In parts of London where homes are worth more than £600,000, first-time buyers could pay an additional £15,000 in stamp duty.
Pensioners
Labour followed through with its pledge not to increase income tax, National Insurance and VAT rates.
Rachel Reeves confirmed that the full new state pension will rise from £221.20 a week to £230.25 – providing an additional £470.60 a year.
Meanwhile, the full basic state pension will increase from £169.50 to £176.45 per week – equivalent to an extra £361.40 annually.
Self-employed
Rachel Reeves confirmed speculation that she will increase national insurance on employers’ pension contributions but self-employed people will be spared the change.
Employers currently pay national insurance for most workers earning more than £9,100 a year but this will fall to £5,000 from next April.
The amount they pay is equivalent to 13.8% of the employees earnings above this threshold but it will be increased to 15%.
Although this will not affect employees directly, businesses and bosses have warned that it could mean that they reduce or stop hiring staff, or that pay rises are pared back.
This will have a knock on effect on working people.
But self-employed people will be spared the change as they have a different national insurance system.
Self-employed workers pay Class 4 contributions, which are 6% on profits of £12,570 up to £50,270.
Above this threshold they pay 2%.
Their different system will mean that they are better off than company employees in the Budget.
Losers
Renters
Rachel Reeves took an axe to the “Right to Buy” discount, which was given to those who want to buy their council house.
The Government said it will mean thousands more homes will remain available to rent as it will protect council housing “existing stock”.
Currently the maximum discount you can get through the Right to Buy scheme is £102,400 across England.
In London boroughs this climbs to £136,400.
The thresholds increase every April in line with inflation.
The size of the discount you get depends on:
- How long you’ve been a tenant with a public sector landlord
- The type of property you are buying
- The value of your home
You get a 35% discount at the moment if you’ve been a public sector tenant for between three and five years.
After five years the discount climbs by 1% for every extra year you’ve been a public sector tenant, up to a maximum of 70%.
Bus users
The Government has also confirmed that the £2 bus fare cap for single journeys will rise to £3 until the end of 2025.
The current cap was introduced by the previous Conservative government to help with the cost of living.
It was set to expire on December 31, 2024.
The change will mean that someone using the bus every weekday will be forced to spend an extra £4 a month on transport.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
