Chancellor Rishi Sunak last week delivered the UK’s first Budget in 18 months, and the first one since the UK left the European Union.
Since then he has unveiled a huge financial package worth at least £330 billion designed to bolster the UK economy during the coronavirus crisis.
The Bank of England cut the base from 0.75% to 0.25% on the day of the Budget. It has now lowered it again to 0.1%, again in response to the unprecedented situation brought about by the spread of the virus.
The Budget can have a significant impact on household finances - here’s a round-up of how it could affect you.
The fast-moving nature of the coronavirus crisis means the plans announced in the Budget have since been supplemented by measures designed to help those with mortgages and other loans.
Banks and building societies are aiming to help customers in financial distress with payment holidays or reduced payments for the next three months. Renters will also be protected from eviction if they cannot pay rent because of the impact of the virus.
A further package of financial support for businesses has also been unveiled.
The Bank of England base rate now stands at 0.1%. It was cut from 0.75% to 0.25% on the day of the Budget and was reduced further on 19 March, again to protect and stimulate the economy during the crisis. Use our base rate calculator to see how your mortgage might be affected.
Statutory sick pay will now be available to people who are self-isolating due to coronavirus, even if they haven’t displayed any symptoms (and providing they qualify by being employed and earning £118 a week or more). People who are caring for others in their household who display symptoms and are self-isolating, will also be able to claim statutory sick pay. Sick notes can be obtained by contacting NHS 111.
Self-employed and zero hours contract workers
The government will make it quicker and easier for self-employed people and those on zero hours contracts to access benefits during the coronavirus outbreak. Those on in-work benefits for example will be able to claim from the first day of sickness, rather than the eighth day.
Businesses with fewer than 250 employees will be able to able to claim a refund for statutory sick pay for their employees, for up to two weeks per employee. Meanwhile, business rates for companies in England with a rateable value below £51,000 will be suspended for a year.
The government is advising against all but essential travel worldwide for 30 days, starting on 17 March. This period may be extended.
British citizens overseas are urged to follow the local requirements regarding travel restrictions and quarantine.
If you’re planning to travel abroad, find out all you need to know about how coronavirus affects travel insurance in our article.
National Living Wage
The National Living Wage (for those aged 25 or over) is increasing from £8.21 to £8.72 an hour this April, but the chancellor today announced plans for it to rise to £10.50 an hour by 2024, so long as “economic circumstances” allow it. It will also extend to those aged 21 and over from 2024.
From the start of the new tax year on 6 April, the threshold at which you start to pay National Insurance Contributions is increasing to £9,500. The government says the move will save a typical employee around £104 in 2020/21, while self-employed people, who pay a lower rate, will save £78.
Stamp duty and mortgages
There will be a Stamp Duty Land Tax surcharge of 2% for non-UK residents, with the money raised being used to reduce rough sleeping. There will be no changes to mortgages, but the government did promise to introduce better guidance for self-employed people who want to apply for a mortgage.
In the 2020-21 tax year, starting on 6 April, the amount families can save into a Junior ISA or Child Trust Fund will be more than doubled, increasing from £4,368 to £9,000. The £20,000 limit for adult ISAs will remain the same in 2020-21.
The band of savings income that is exempt from tax payments will remain at £5,000 in 2020-21.
The chancellor announced a series of measures designed to bolster flood defences in the worst-hit areas. A total of £120m is available immediately to repair flood defences damaged in this winter’s floods, and £200m is available for urgent new defences in various parts of the country. Plus, over the next six years the government will spend £5.2bn on flood defences, protecting 336,000 properties.
Read our guide to protecting your home against flooding.
Mr Sunak announced the “largest ever investment” in strategic roads and motorways in England – with over £27m set aside over the next five years to fill around 50 million potholes across the country. Funding will also extend to work on more than 20 connections to ports and airports, more than 100 junctions and more than 4,000 miles of roads.
Tax on petrol and diesel will remain frozen for the 10th consecutive year – this will save the average car driver a cumulative £1,200 compared to the pre-2010 fuel duty plans.
The tax relief on red diesel will be abolished for most sectors, and businesses will be given two years to make the necessary preparations before this is implemented.
The government will invest in the electric vehicle charging infrastructure – it will support the roll out of rapid charging hubs, so drivers are never more than 30 miles from being able to charge their electric cars.
Alcohol and tobacco
The chancellor announced that the levy on spirits, beer, cider and wine will remain frozen – this means that the planned increase in duty on beer and spirits is cancelled.
Duty rates on all tobacco products will increase in line with the Retail Price Index (RPI) +2% until the end of this parliament, while the rate on hand-rolling tobacco will increase by RPI +6% this year, coming into effect from 6pm, 11 March 2020.
Broadband and 4G
Mr Sunak promised £5bn will be spent on providing gigabit-capable broadband in the hardest-to-reach areas of the UK, and £510m will go into rural phone networks to ensure 4G coverage will reach 95% of the country.
Tampon tax and digital books
The 5% VAT charged on women’s sanitary products, the so-called tampon tax, will be abolished at the start of 2021.
Digital books, e-magazines and e-newspapers will also be free from VAT as of 1 December 2020, bringing them in line with physical books. VAT is currently charged at the standard rate of 20% for digital publications.