5 Key ways how the UK Budget 2021 will affect you

UK’s Chancellor of the Exchequer, Rishi Sunak presented the Government's Budget 2021 on October 27, 2021. While it had many announcements, here are the 5 key points how it will affect the average UK citizen.

 

1. Minimum wage rate will be increased from £8.91 to £ 9.50 per hour.

The people on minimal wage and above 23 years will receive an increase in their wages by April 2022. There will be a corresponding increase of minimum wage of younger work people as well. The increase in wages is to assist families to face the rising prices and taxes.

2. The duty structure on Alcohol drinks will be simplified 

A complete overhaul of alcohol duties is scheduled take place from February 2023 onwards. As a result, the high strength alcohol will go up in prices due to higher duties. While there will be lower duties on lower-strength alcohol like wine and beer.

3. The planned increase in fuel duty prices is cancelled

At present, 60% of the fuel price is made of fuel duty and VAT.  The fuel duty has been on freeze for more than a decade and this budget cancelled earlier planned increase in fuel duty. This is mainly considering the rising domestic gas and electricity prices.

Product Value 40%

Duty & VAT 60%

4. Lower Air Passenger Duty for Domestic flights within UK 

This budget has proposed to cut the Domestic Air Passenger Duty (APD) by 50% between airports in England, Scotland, Wales and Northern Ireland. This will come into effect from April 2023 onwards. The current rate of APD for a one-way domestic flight in economy is £13, while the new rate will be £6.50 each way.

However, taxes will rise for international flights such as long-haul journeys of over 2,000 miles. As per the current rules, APD is charged in two bands, for destinations under 2,000 miles and above 2,000 miles. But under the new rules, there will be three bands set at zero to 2,000 miles, 2,000 to 5,500 miles, and 5,500 miles and over. The new current APD will be as follows.

Bands	Current	Proposed
zero to 2,000 miles	£13	£13
2,000 to 5,500 miles	£84	£87
5,500 miles and over		£91

 

 5. Boost in Universal Credit

This budget has decided to reduce the Universal Credit taper from 63% to 55% from Dec 01, 2021 on wards. As a result, the people who receive the benefit would be able to save 8% more of whatever the benefit they receive.

Note : Universal credit is a benefit payment for working people. The threshold where people can earn without losing the benefit is called the work allowance and it is currently at £515. Most universal credit claimants lose part of their benefits if they earn more money than the work allowance. The rate at which they lose the benefits is known as the taper rate. The current taper rate 63% and it means that for every £1 you earn above £515, you will lose £0.63 from your benefits.