The Budget has created groups of “winners” who may find themselves better off and “losers” who could be worse off, as the Government takes steps to rebuild the public finances.
Here is a closer look at these groups:
– Home movers who may have missed out on stamp duty savings
The stamp duty holiday in England and Northern Ireland had been due to end at the end of March but it will now remain fully in place until the end of June, with a “tapered” holiday between July and September.
This means that the “nil rate” band will remain at £500,000 until the end of June, then it will halve to £250,000. From October 1, the nil rate band will go back to its “normal” threshold of £125,000.
– First-time buyers and home movers with small deposits
A new 5% deposit mortgage guarantee scheme will be available to current homeowners as well as first-time buyers looking to buy a house for up to £600,000.
– Furloughed workers
The furlough scheme is being extended until the end of September. The Coronavirus Job Retention Scheme has protected more than 11 million jobs since its inception. Employees will continue to receive 80% of their current salary for hours not worked.
– Some self-employed people
The Self-Employment Income Support Scheme (SEISS) will be extended until the end of September. In what the Government described as a major improvement in access to the self-employed scheme, more than 600,000 people, many of whom became self-employed in 2019-20, may now be able to claim direct cash grants under SEISS.
– Low-paid workers
From April 1, the National Living Wage will increase from £8.72 to £8.91.
There will also be a six-month extension to the current £20-a-week Universal Credit uplift.
Fuel duty is being frozen for the 11th year in a row.
– Alcohol drinkers
Alcohol duties will be frozen across the board for the second year running – collectively saving drinkers £1.7 billion.
– Contactless cardholders
The contactless payment limit will increase to £100. The banking industry will implement the new £100 limit later this year. This could make payments more convenient for some shoppers and the Government says it will help boost the retail sector.
– Income tax payers
More people will be dragged into paying larger amounts of tax as wages increase.
The point at which people start paying income tax will increase by £70 to £12,570 in April.
But it will be maintained at that level until April 2026, meaning more people are pushed over the threshold.
The 40p rate threshold will increase by £270 to £50,270 and then be frozen until April 2026.
– Pension savers
The pensions lifetime allowance – the amount people can save before tax charges kick in – will be held at its current level of £1,073,100 until April 2026.
Pensions experts have described this as a “stealth tax” and have warned more of middle Britain, including NHS doctors, could be caught in the tax net.
Baroness Altmann, a former pensions minister, said the decision “may well damage confidence in long-term pension planning”.
– Those inheriting wealth
The inheritance tax “nil rate” band will remain at £325,000 until April 2026.
Neil Jones, tax and estate planning specialist at Canada Life, said: “The nil rate band increased to £325,000 in April 2009 and who would have thought it would remain at this level for 17 years.
“With property prices and investment markets rising and the lack of any increase, we will see yet more people caught by the inheritance tax net paying this deeply unpopular tax.”
– “Left out” households
Industry bodies called for more to be done to re-skill the workforce and said many workers and businesses, including those in the travel trade, will remain worried about their prospects. Some charities have said the £20 Universal Credit uplift should have been made permanent.
– Savers who are able to maximise their tax-free Isa allowance
The adult Isa annual subscription limit for 2021-22 will remain static at £20,000. The annual subscription limit for Junior Isas and Child Trust Funds for 2021-22 will also remain unchanged, at £9,000.
More than £100 million will be invested in a taxpayer protection taskforce comprised of HMRC staff, to combat fraudsters trying to exploit Covid-19 support packages.
With an increased contactless limit at £100, people may increasingly turn to cards where once they would have used cash. The Government has however pledged to legislate to protect the future of cash.