Budget 2020 round-up: NI threshold raised, fuel duty frozen and more
National insurance thresholds will be raised and duties on fuel and alcohol frozen as part of the 2020 Budget unveiled by Chancellor Rishi Sunak.
A key announcement in the Budget was the extension of sick pay and benefits to help those affected by coronavirus. The Chancellor unveiled a series of changes, including allowing people to claim contribution-based employment and support allowance from day one of illness rather than day eight, removing the 'minimum income floor' for universal credit claimants and allowing sick notes to be issued by the NHS 111 service. See full details in our Coronavirus sick pay and benefits MSE News story.
Another change we've spotted buried in the Budget documents is an increase to the amount you can save in a junior ISA or Child Trust Fund from April. It's going up from £4,368 to £9,000 a year – see our Junior ISA allowance to rise MSE News story for full details.
Here's a summary of some of the other key measures which will affect consumers – some of which had been announced previously:
- The threshold for paying national insurance will be raised in April. This had already been announced by Sunak's predecessor, Sajid Javid, but was confirmed today. From Monday 6 April, taxpayers will pay national insurance on earnings over £9,500, up from £8,632 at the moment. The Government says this will save the average worker £104/year.
- Fuel duty will be frozen for the tenth year in a row. There had been speculation that fuel duty might rise this year, but Sunak said the tax will remain at 57.95p per litre of petrol, diesel, biodiesel and bioethanol, as it has done since March 2011. VAT at 20% is also added to the cost of fuel, and this won't change either.
- Duty on all types of alcohol will be frozen. The tax you pay on beer, cider and wine depends on its strength, while spirit duty stands at £28.74 per litre of pure alcohol. (Again, VAT at 20% is added to the cost of alcohol.) This won't change.
- The 'tampon tax' will be abolished. This had already been trailed at the weekend, but was confirmed today. The so-called 'tampon tax' – the 5% rate of VAT charged on sanitary products – will be scrapped when the transition period for the UK leaving the European Union ends on 31 December 2020.
A zero rate of VAT will apply to sanitary products from this point. See our Tampon tax set to be abolished news story for full details.
- VAT on e-publications will be scrapped in December. A zero rate of VAT will apply from 1 December 2020, meaning e-books, e-newspapers and e-magazines will have the same VAT treatment as physical versions. The Government says it expects the publishing industry to pass the saving on to consumers.
- Non-UK residents buying properties in England and Northern Ireland will have to pay an extra 2% stamp duty. This will be a flat rate of tax charged on the entire value of the property. It will apply from 1 April 2021.
- Prepaid funeral plans will be regulated. The Budget documents reveal that the Government plans to legislate to bring funeral plan providers within the remit of regulator the Financial Conduct Authority. It says: "This will protect consumers by ensuring, for the first time, that all prepaid funeral plan providers are subject to robust regulation."
- The 'national living wage' will rise to £8.72 from April. The national living wage is essentially the minimum wage employers must pay to workers aged 25 or over, and it's going up by 6.2% on Wednesday 1 April. This was first announced at the end of last year and confirmed today – see our National living wage to rise news story for full details.
- NS&I's financing target has been cut – meaning we could see rate cuts to Premium Bonds and its other savings products. The Government-backed National Savings & Investments has had its target cut from £11 billion this financial year to £6 billion next. NS&I has already announced a raft of rate cuts to its savings products, including Premium Bonds, which will take place in May. This cut in the amount of cash NS&I is being asked to bring in from savers next year may mean we see it bring in more rate cuts.
- The Government won't sell off any more pre-2012 student loans. Following an internal review, the Government says it won't be pursuing any more sales of pre-2012 income-contingent student loans.
- A new fund will help tackle potholes. The Government has pledged £500 million per year from 2020/21 to 2024/25 to help tackle potholes and stop them forming.