The past 18 months have been particularly difficult on our pockets due to the Covid-19 pandemic and means that chancellor Rishi Sunak's latest budget and spending review is of particular importance.
The plan has a major impact on how much tax we pay, how much we earn and how much we have left to spend.
Sunak insisted the budget, in which there was £150 billion allocated for day-to-day departmental spending, will bring in an "age of optimism".
Meanwhile, Labour have been critical of the budget. Shadow chancellor Rachel Reeves said: "Working people are being asked to pay more for less, for three simple reasons: economic mismanagement, an unfair tax system, and wasteful spending.
"While the Chancellor and Prime Minister like to pretend that they’re different, this Budget today will only make things worse
Here are five ways the budget can impact you.
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Universal credit is claimed by over 5.8 million people in the UK.
Recently, the government announced the end of a £20 boost to universal credit payments that was brought in during the pandemic to help people on the scheme. It meant that there was around a £6 billion cut in spending on universal credit per year.
In the latest budget, the chancellor announced plans to ease this cut by a change to the taper rate for universal credit claimants in work, which is around 40% of claimants.
However, the £20 a cut will still go ahead, despite there being speculation that this would be reversed.
The taper rate is a means of reducing the amount of money claimed by universal credit based on how much a claimant earns through their wage. At 63%, the taper rate currently means that every pound earns sees a 63p lost in money claimed. This is being reduced to 55%.
This only affects universal credit claimants currently in work.
Will I have to pay more in tax?
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In September, the government said they plan to increase the national insurance tax in the hope of raising £12 billion a year, aimed at improving the backlog in the NHS.
The changes will come into effect from April 2022 and will be a rise of 1.25%.
In response to Sunak's budget statement in the House of Commons today, Reeves said: "Working people are being asked to pay more for less."
Are my wages going up?
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In order to counteract the health and social care levy in the form of the national insurance tax increase, as well as the rising cost of living, the government hopes that the increase in the national minimum and living wage will help alleviate the burden.
A rundown of the increases:
- For workers over 23, the national living wage will go up from £8.91 to £9.50 an hour. This rise means a full-time worker will get £1,074 extra a year before tax and it is a rise of 6.6%.
People in work from the ages of 21 to 22 will see the national minimum wage will go up from £8.36 to £9.18 an hour, a 9.8% increase.
National minimum wage for 18 to 20-year-olds will go from £6.56 to £6.83
It will move up from £4.62 to £4.81 for under 18s
Apprentice wages will increase 11.9% from £4.30 to £4.81 per hour.
But the wage increase does not necessarily mean that people will have more to spend all the time. Gas and energy prices have already gone up, as has the cost of living. Although, the 6.6% rise in national living wage is much higher than the current rise in the cost of living, which is 3.1%.
Alcohol – will it cost more?
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Some businesses have voiced concerns over the wage rise and are worried about being able to pay their workers the extra rates.
This is particularly important for the hospitality sector as well as bars, pubs and restaurants.
It means the price of booze is likely to go up and Sunak has attempted to address this.
Higher-strength alcohol will go up in price, but lower strength booze like sparkling wine and beer less than 8.5% in strength will see a lowering in duties.
Sparkling wine costs will fall by around 62p a bottle from February 2023, when the rates come in.
Here is a rundown of the eventual price changes of certain types of alcohol, courtesy of The Mirror:
- Stella Artois, pint – down 3p from £3.80 to £3.77
- Frosty Jacks cider, 750ml bottle – up 45p from £3.70 to £4.15
- Kopparberg strawberry and lime cider, pint – down 13p from £3.80 to £3.67
- Hardy's Merlot wine, 750ml bottle – up 35p from £7 to £7.35
- Blossom Hill rosé, 750ml bottle – down 12p from £8 to £7.88
- Buckfast fortified wine, 750ml bottle – up 81p from £8.50 to £9.31
- Bailey's Irish cream, 750ml bottle – down 41p from £17 to £16.69
Families will be eligible for share of an extra £300 million in childcare support.
This includes a network of family hubs where families can receive childcare and midwifery services, as well as job advice and breastfeeding help.
Of the £300 million, there will be £100 million for parents with poor mental health and £120 million for other family support programmes.
However, Labour argued that the scheme was not enough to alleviate the cuts made to Sure Start.
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