Sunak Refocuses the UKS Spending Priorities for a Post Covid Economy in Budget 2021

Are you curious to know more about spending strategies from Sunak’s autumn budget announcement? Our accounting service website enlists everything in precise. 

In his Autumn Budget and Spending Review speech in parliament on Wednesday, UK chancellor Rishi Sunak put out broad intentions for the next three fiscal years.

In his speech, he focused on the core pillars of health, transportation, and the cost of living, announcing measures such as lifting the public sector pay freeze and increasing the national living wage.

Sunak, speaking to a packed audience on Wednesday, emphasised the rising number of people in a job as well as the current economic recovery, stating, “Our plan is working.”

“The budget does not put an end to Covid; we face difficult times ahead,” he warned.

With that in mind, here’s what Sunak said in his Autumn Spending Review for 2021:

The chancellor stressed that inflation is exerting pressure on the economy, as well as supply chain and energy market concerns, adding that these will “take months to relieve.”

According to him, the Government is expected to provide additional cash to upgrade lorry park infrastructure. Sunak also stated that the vehicle excise charge for HGVs would be frozen.

He confirmed a half-billion-pound home support fund for families struggling with the expense of living when speaking about energy costs.

Banks and business rates are part of the business budget.

Sunak believes that eliminating company rates would be foolish because they generate £25 billion in revenue.

However, he stated that hospitality and leisure enterprises with £110 million would receive a 50% rate reduction.

Sunak claims that this is the largest tax cut to business rates in over 30 years, with a £7 billion reduction in business rates.

He also stated that corporate taxes would be increased. Instead of terminating in December, the £1 million yearly investment allowance will be extended until March 2023. However, he claims that the banking surcharge will be reduced.

Pay and the National Living Wages.

1. The increase will be welcomed by those with the lowest incomes and will mean fewer low-paid workers, but it doesn’t address widespread concerns about how cutting the £20 Universal Credit uplift might affect the poorest.
2. Inflation warnings have meant maintaining the freeze has been difficult to justify, with the Bank of England (BoE) saying that the Consumer Price Index could potentially reach as high as 5% early next year.
3. Sunak has also moved to raise the national living wage to £9.50-an-hour ($13) from £8.91 from next April for workers aged 23 and over.
4. The speech confirmed news trailed by the Treasury earlier this week that the Government would move to unfreeze public sector pay.
5. The freeze had been put in place because private sector pay has been on an unsteady footing over the past two years.

The universal credit system

The current Universal Credit earnings taper rate is 63%. This means that for every £1 you earn above your work allowance (if you qualify), your Universal Credit will be reduced by 63%. This amount will be automatically deducted from your Universal Credit payment.

Sunak announced an 8% tax cut on this, reducing it from 63% to 55%.

Sunak stated that the tax cut would be worth more than £2 billion per year and implemented within weeks, no later than December 1.

Funding for devolved nations

Through the Barnett formula, this Spending Review also provides an additional £8.7 billion per year to the devolved administrations:

The Scottish Government will benefit from an increase in funding of £4.6 billion per year.

Welsh Government funding increase of £2.5 billion per year

a £1.6 billion per year funding increase for the Northern Ireland Executive

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