The budget always makes headlines even in normal times but this year; as we emerge out the other side of the coronavirus pandemic and the cost of living is increasing, there was even more anticipation than usual.
There were a few headline announcements related to business and earnings which we have covered in this blog.
This was first announced over the weekend, but the Chancellor today confirmed that the National Living Wage will increase from £8.91 per hour to £9.50 next year. The other minimum wage rates are also increasing next year including a nearly 12% increase in the apprentice rate and nearly 10% increase in the rate for 21-22 year olds. You can find the table of all the new wage rates here.
Higher wages are great news for employees of course but some employers might be worried about managing a higher wage bill so do get in touch if you’d like to talk through the new figures.
This comes on top of the recently announced increase in National Insurance which means employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance from April 2022.
There was some better news for those who are working but also claim Universal Credit – they will be able to keep more of the money earned as the taper is being cut so instead of losing 63p of benefit for every £1 earned above the work allowance, the amount will be reduced to 55p. The amount that can be earned before the taper kicks in has also been increased by £500.
Apart from the National Insurance increase mentioned above, there won’t be any other tax increases and the personal allowance will also stay the same. That means the amount you can earn before paying tax will be fixed at £12,570 for the next tax year and in fact for future tax years until 2026. This isn’t such good news with inflation predicted to be around 4% so money earned won’t go quite as far.
Businesses will be glad to hear that business rates will not be increasing next year as originally planned and more frequent revaluations will be introduced. Many of my clients are part of Cornwall’s vibrant hospitality industry to a 50% cut in business rates for pubs, cinemas, restaurants, gyms and other hospitality venues will be welcomed, especially after the very difficult 18 months they’ve just been through.
There was also some good news on the cost of some of our day-to-day purchases. There will be no increase in fuel duty as was originally planned and there also won’t be a rise in duty on beer, wine, cider and spirits. In fact, rates on many lower alcohol drinks including rose wine, lower strength beers and wines will be reduced and the reduction in rates for draught beer will mean drinkers saving around 3p per pint…but not until 2023.
Overall, The Budget presents a fairly mixed picture for employees – the increase in wage rates may be offset by an increase in National Insurance. Some of the bigger announcements in terms of government spending are interesting though and may even be good news for Cornwall – there’s a promise of funding for a new Scillonian ferry, a commitment to match the EU money we used to receive and even the possibility of a share of the Levelling Up fund.