Against a challenging, covid-19 dominated, economic backdrop, Chancellor Rishi Sunak today presented his budget. This article seeks to provide our instant interpretation of what the main changes will mean for FPS members.
- Sadly many veterans will currently be furloughed. Good news then that these payments have been extended to September. Apart from the extension of the Coronavirus Job Retention Scheme (CJRS) (in other words the furlough scheme), the Government is also introducing two further grants under the Self-Employment Income Support scheme (SEIS).
- No mention of any changes to the triple lock mechanism for state pensions.
- The £20 universal credit increase to the standard allowance will be extended for 6 months.
These changes look to be good news, but of course may be merely deferring financial hardship for many by 6 months.
- No increase in fuel or alcohol duties for 1 year in 2021-2022.
- The tax-free and higher tax rates will be increased next year to £12,570 and £50,27. They will then be frozen up to and including 2025-6. Allows the Government to keep its promises of not raising taxes, but will generate an estimated £8.2 billion extra tax income over the period to end 2025-26.
- Inheritance tax thresholds to be held at current (2020-2021) levels until 2025-6. Anticipated to generate £445 million extra tax receipts by end 2025-6.
- Lifetime Allowance threshold maintained at current level (£1,073,100) until 2025-6. Previously it was government policy to increase this allowance in line with changes in the Consumer Price Index (CPI). It is estimated that this will generate additional tax revenues of £300 million over the period. More high earners will be hit by this charge when retiring.
- Annual Allowance – No change. The annual allowance has been fixed for most at £40,000 for some years now. We will continue to press for change while remaining cognisant of the pressure on the public finances.