Sunak Unveils £65bn Support, But Starts Tax Rise Countdown
Record Spending, Hard Truths
Chancellor Rishi Sunak has pledged a further £65 billion to back Brits through lockdown and beyond. But he warned MPs that the government must start clawing back some of the staggering £407 billion splurged during the pandemic. “Unprecedented levels of spending cannot continue,” Sunak said. “I must be honest about how we will balance the books.”
Tax Thresholds Frozen, More Brits Hit by Tax
The income tax personal allowance will rise to £12,570 in April but freeze there until 2026. Meanwhile, the higher rate threshold gets a bump to £50,270 next year – then stays put. That means as wages rise, more people will be dragged into paying tax, and more will slip into the top tax bracket.
Sunak insisted, “People’s take-home pay will not fall because of this, but it does remove the incremental benefit of thresholds rising with inflation.”
To cushion the blow for lower earners, there’ll be no hike in income tax, national insurance, or VAT.
Corporation Tax Hiked to 25%
From 2023, corporation tax jumps from 19% to 25%. Sunak added, “Once we are on the road to recovery, we need to start fixing public finances.”
Furlough Extended But Employers to Pay More
The furlough scheme, which covers 80% of workers’ wages, is extended until September. But from July, employers must chip in 10%, with the government footing 70%. In August, the employer’s share rises to 20%. Throughout, employees will still receive at least 80% pay for hours not worked.
