30 million people across the UK will benefit from the biggest personal tax cut in a decade from today
‘Hard working Brits’ will save up to £330 per year – 2.2 million lifted out of personal tax altogether
70% of UK workers now paying less National Insurance, even after accounting for the Health and Social Care Levy
30 million people across the UK will benefit from the biggest personal tax in a decade from today – with hard working Brits saving up to £330 per year.
The £6 billion tax cut will see the level at which people start paying National Insurance rise to £12,570 – lifting 2.2 million people out of paying any personal tax and ensuring people get to keep more of the money they earn.
The threshold change means that 70% of UK workers will pay less National Insurance, even after accounting for the Health and Social Care Levy that is funding the biggest catch up programme in NHS history and putting an end to spiralling social care costs.
Speaking before his resignation last night, formerChancellor of the Exchequer Rishi Sunak said: “I know rising prices are putting pressure on hard-working families across the UK – which is why we’ve stepped in to help to ease the burden with a £37 billion package of support this year, including at least £1,200 going directly to the 8 million most vulnerable families.
“Today marks the next stage in that package, with the biggest personal tax cut in over a decade coming in to help millions of workers across the UK keep up to £330 more each year.”
The Prime Minister (at time of writing, anyway – Ed.) said: “We know it’s tough for many families across the UK, but we want you to know that this government is on your side.
“Today’s tax cut means around 70 per cent of British workers will pay less National Insurance – even after accounting for the Health and Social Care Levy that is funding the biggest catch up programme in NHS history and putting an end spiralling social care costs.
“So whether you are a receptionist, work in hospitality or are a delivery driver, this tax cut is likely to make you and your family better off.”
From today the level at which people start paying National Insurance has risen from £9,880 to £12,570.
This change means that millions of people working across hundreds of different industries across the UK will now be better off.
This includes bricklayers who’ll save £218, care workers who’ll save £324, hairdressers who will get a £118 benefit and nursery assistants who’ll get a £343 yearly boost.
Workers can check their salary in the government’s online tool to estimate the amount they could save between July 2022 to July 2023.
The last major personal tax cut of today’s magnitude was nearly ten years ago, when the income tax personal allowance increased by £1,100 in 2013. Today’s threshold change is more than double that, as working people are now able to hold on to an extra £2,690 free from tax.
Today’s change to National Insurance thresholds comes as part of the Chancellor’s wider vision for a lower tax economy. At the Spring Statement Mr Sunak announced a 1p income tax cut in 2024 – which will be the first cut to the basic rate in 16 years and will save the average taxpayer a further £175 a year.
The Chancellor also committed to cutting and reforming business taxes later this year in the autumn, to help spur business growth and productivity. The government is currently working with industry on how best to do that.
The increase to the National Insurance thresholds will leave around 76% of National Insurance payers in the North East better, 75% in the North West and Merseyside, and 62% in London.
Today’s landmark personal tax cut also comes as the government launched new Help for Households campaign designed to raise awareness and signpost people to the £37 billion in support on offer and targeted at those most in need.
The support provides millions of the most vulnerable households at least £1,200 of support in total this year to help with the cost of living, with all domestic electricity customers receiving at least £400 to help with their bills.
It also includes a 5p fuel duty cut – the biggest cut ever to fuel duty rates, a rise in the national living wage to give full time workers an extra £1,000 and a cut to the Universal Credit taper rate to provide over 1 million families an extra £1,000.
The NICs threshold change takes effect following the government making tough but responsible decisions to manage the public finances responsibly and choosing not to saddle future generations with almost £400 billion of debt used to protect jobs and the economy during the pandemic – worth around £5,500 for every person in the UK.
The government had planned for this good news story to be the big news event of today, but those plans were scuppered by the resignation of two senior cabinet ministers last night. As former Prime Minister Harold MacMillan once ruefully observed: “Events, dear boy. Events” …
The UK Government has announced millions of pounds of new measures to tackle unemployment amongst the over 50s on benefits.
New measures set to help quarter of all jobseekers get back into work
Multi-million package will increase jobcentre support for over 50s including those thinking about retirement
Long term unemployed will be referred to the multi-billion-pound Restart Scheme which is already supporting a quarter of a million back into work
The new support follows ministers meeting their target to get half a million people into work in under six months, as part of the Way to Work jobs push launched in January.
Keeping up the momentum, £22 million will be invested in new measures to tackle unemployment amongst the over 50s on benefits, as a stable income is the best route for people to support themselves through challenging times.
Jobseekers over the age of 50 will have more one-to-one support at jobcentres to help them get into, and progress in work, boosting their earnings ahead of retirement.
This increased support will be boosted by 37 50PLUS Champions covering every district across England, Wales and Scotland who will work with local employers to help them realise how their recruitment could benefit from the talent of older workers.
Mid-life MOTs will also be available in jobcentres, targeting those thinking about retirement and engaging them to take stock of their skills and finances, and consider taking jobs that could boost their incomes based on their skills experience.
Minister for Employment, Mims Davies MP said: “Older workers are a huge asset to this country, and there are currently more than 400,000 over 50s in roles than before the pandemic.
“We’re increasing funding and support at every step of their journey up the career ladder, to ensure everyone gets the support they need to get into work, progress and use their experience to boost their earnings and plan for a better future.
“Helping people find the security of a stable income, through a job they can take pride in, is also one of the best ways for people to support their families during these challenging times.”
Carole Easton, Chief Executive at the Centre for Ageing Better, said: “Seeing DWP continue to recognise the importance of a bespoke approach to older workers is really welcome.
“We know that older workers face unique challenges, such as ageism in the workplace and a possible gap in skills compared to some of their younger counterparts, so we will gladly support any tailored action that begins chip away at these significant roadblocks standing in the way of older people accessing fulfilling work.”
Research shows that people over 50 are more likely to have caring responsibilities, with 12% of men and 16% of women aged 55-64 providing informal care and increased support from Work Coaches will help them navigate these barriers.
With the economy back on its feet, and the demand for experienced staff, the advice will help older workers make the right choice for them. And for those who have been out of work for nine months, the government’s Restart Scheme will provide a year of intensive support to get them back on the career ladder.
One year since its launch, the Restart Scheme is already seeing the first jobseekers take up work and leave the scheme and is currently supporting a quarter of a million people get the skills they need to re-enter the workforce.
This is part of the government’s renewed focus on growing the economy and helping people find work and boost their earnings.
Package of measures will increase childcare support for parents, boost the number of childminders and drive take up of childcare offers, to address rising costs
The UK government has today announced ambitious new plans to improve the cost, choice and availability of childcare that will benefit hundreds of thousands of parents across the country.
The UK has some of the highest-quality childcare provision in the world with 96% of early years settings rated by Ofsted as good or outstanding, but it is also one of the biggest costs facing working families today. This means some families, in particular women, feel they are not able to return to the workplace after giving birth due to the high cost of putting their child into paid care.
With the cost of living continuing to rise, the UK government says it is committed to doing everything it can to support families with their finances while keeping people in high-wage, secure jobs that help grow the economy. New plans are being set out today to ensure high-quality and affordable childcare is accessible to all.
To drive down costs for providers and parents, a new consultation will look at increasing the number of children that can be looked after by each staff member in early years settings.
It will propose changing staff-to-child ratios from 1:4 to 1:5 for two-year-olds, giving providers more flexibility in how they run their businesses while maintaining safety and quality of care. Childcare for children aged 0-2 is the most expensive for providers to deliver, largely given the need for higher supervision levels.
This could potentially eventually reduce the cost of this form of childcare by up to 15%, or up to £40 per week for a family paying £265 per week for care for their 2-year-old, if providers adopt the changes and pass all the savings on to parents.
Education Secretary, Nadhim Zahawi said: “Every child deserves a great start in life and that means giving families the support they need.
Childcare is an integral part of our economy, and these reforms prove again that this government is on the side of working families. I’m hugely grateful to the thousands of dedicated early years professionals who provide daily care and education to our youngest children, which is why I am determined to support them by giving them greater flexibility in how they run their services.
This in turn will support thousands of families across the country, helping to develop children’s skills while also supporting parents into work.
The Westminster government will also increase choice and affordability for parents by taking action to open up the childminder market.
While early years settings such as nurseries are the most popular option for families, childminders are generally the most affordable and flexible form of childcare. While the average cost of a two-year-old attending a nursery for 50 hours a week in England is £265 per week, this compares to £236 with a childminder. The government will support more people to become childminders by:
Reducing the upfront costs of becoming a childminder via financial support;
Allowing childminders to spend more of their time working from a greater range of locations – for example a local community centre or village hall rather than their own home;
Giving childminders greater flexibilities within the ratios when looking after their own children or siblings of other children;
Working with Ofsted to reduce inspection of childminders; and
Slimming down the childminder specific Early Years Foundation Stage, reducing the framework by one-third to ensure content is targeted and simpler to navigate.
Government will streamline the Ofsted registration process for providers. More providers registering would mean that parents have a wider choice of providers on which to use these schemes, to pay for childcare that supports their working lives.
The government will also encourage the growth of Childminder Agencies (CMAs). CMAs could ultimately become major players in the childcare market – stimulating competition and driving down costs while providing parents with more options for care. CMAs are central bodies that remove the individual administrative and regulatory burden on childminders, as well as often providing parents with tools such as mobile apps through which to book their childcare.
Minister for Children and Families Will Quince said: “I’m proud of the excellent quality of childcare and early education in England, which is a huge asset to working parents. But too many are struggling to balance work with childcare costs.
“We know there are thousands of parents who are eligible for government support but not taking it up. That’s why we want to increase awareness of the existing childcare offers, allow providers to provide services more flexibly and make sure funding gets where it is needed most.”
Also announced today is an additional £10 million investment for Maintained Nursery Schools, into the supplementary funding they receive from 2023-24.
These settings often care for some of the most disadvantaged children in the country and have additional costs that other early years settings do not – such as the requirement to have a headteacher – because they are constituted as schools.
Since the introduction of the Early Years National Funding Formula in 2017, the UK government has provided supplementary funding for these nurseries to protect their funding levels.
This additional funding forms part of a separate consultation on plans to reform how early years funding is distributed around England, to ensure the system is fair, effective and responsive to changing levels of need.
The UK government has spent more than £4 billion each year for the last five years helping families with the cost of childcare, but almost one million eligible families have not taken up their right to Tax-Free Childcare, which is worth £2,000 per year or £4,000 for children with disabilities. Universal Credit Childcare allows families to reclaim 85% of their childcare costs, worth up to £1,108 per month.
The government is also driving a renewed campaign via the Childcare Choices website so parents can access the support they are entitled to, through a ramped-up marketing campaign backed by £1.2 million, which launched last week. This will also encourage providers to take the necessary steps to offer the full range of childcare support to parents using their services.
Exchequer Secretary Helen Whately said: “Tax-Free Childcare provides a helping hand with childcare costs for working families but thousands of parents could be missing out.
“With almost one million families eligible, I want to encourage parents to take advantage of this support of up to £2,000 per year for each child.”
Secretary of State for Work and Pensions Thérèse Coffey said: “We want more people to take up Universal Credit childcare financial support that is available now to help working families.
“We also want more childcare providers to register with Ofsted and unlock more places that can be subsidised to help with the cost of living.”
The government also offers 15 hours per week of free childcare or early education for all 3- and 4-year-olds, rising to 30 hours for working families, and 15 hours for disadvantaged 2-year-olds.
The Government recently announced that eight million of the most vulnerable households (around a third of all UK households) will receive £1,200 this year and all families will receive £400 – this is on top of changes to Universal Credit, National Living Wage and National Insurance thresholds, so that people keep more of what they earn.
This takes total government cost of living support to over £37 billion – higher than other major economies around the world.
Gemma, from Portsmouth, a mum of one uses Tax-Free Childcare. She said: As a working mum, it can be tough balancing childcare. But Tax-Free Childcare allows me to free up cash that can cover the costs of other things – when you’re talking about saving 20% of your childcare costs it can make a big difference.
The Government has recently launched a new website which brings government support on offer together in one place so the public can see what support they could be eligible for: www.gov.uk/costoflivingsupport
Featuring on radio, social media and bus stop advertising, the campaign aims to increase parents’ awareness and understanding of the childcare support available to them from the government, and maximise the number of people who take up our offer. This will coincide with the school summer holidays, maximising take up over the long break and beyond.
The campaign will signpost to parents, bringing together in one place the support available through Universal Credit, Tax-Free Childcare and 15-30 hours free childcare, clearly setting out eligibility requirements and providing a handy calculator so parents can estimate their entitlement. We will also look at simplifying the website further to make it as easy as possible for parents to understand the support available.
Universal Credit’s childcare offer can save families hundreds of pounds each month – for example, a single parent with a young child who works in social care three days a week could benefit by around £500 a month if they claimed support for their childcare costs.
Tax-Free Childcare helps working families, including the self-employed, to reduce their household costs and keep more of what they earn. Working parents with annual salaries of up to £100,000 can get up to £2,000 of childcare support each year, or £4,000 for children with disabilities.
Recent Tax-Free Childcare statistics from HM Revenue and Customs (HMRC) have revealed that 512,415 families received up to £2,000 towards the cost of their childcare during the 2021 to 2022 tax year, up from 374,135 in the previous year. More than 384,000 families used Tax-Free Childcare in March 2022 – the highest monthly number of families recorded using the scheme since it was launched in April 2017.
The announcements follow visits by Children’s Minister Will Quince to the Netherlands, Sweden, France and Scotland – whose staff:child ratios for two-year-olds the consultation launched today seeks to mirror.
The Government will also explore how to improve recruitment and retention of staff in the sector, giving parents as much confidence in the care their child receives as possible.
The UK has announced an increased contribution to NATO as the Prime Minister and Defence Secretary attend the NATO summit in Madrid.
Defence Secretary Ben Wallace MP said: “We have always been clear that our strength and security comes from our alliances, and NATO is at the heart of that.
“The New Force Model and our presence in Estonia will ensure that the Alliance is able to respond at pace, helping to determine stability across Europe in the decades to come.”
RAF Typhoon and F-35B Lightning fighter jets, Royal Navy vessels including Queen Elizabeth Class aircraft carriers, and brigade-sized land forces will all be made available to NATO’s Supreme Allied Commander Europe (SACEUR) as part of the New Force Model.
NATO has introduced the New Force Model in support of Leaders’ decision to modernise and strengthen the NATO Force Structure for the future. Allies will declare capabilities, equipment and forces available to support SACEUR, ensuring they are in the right place at the right time. This will allow the Alliance’s military command to plan for emerging threats, safe in the knowledge that these assets will be available to take part in the Alliance’s response.
The UK will also contribute to the new Allied Reaction Force: an agile, multi-domain and combat-effective force ready to deploy at very high readiness and to respond to a range of crises.
It comes as the Alliance has agreed a new posture of stronger forward defences to reflect the radically changed security context since Russia’s unprovoked invasion of Ukraine.
In response to Russia’s invasion of Ukraine, the UK increased its presence in Estonia to include the temporary deployment of a second battlegroup, doubling the total number of deployed personnel to over 1,600.
The lethality of these deployments will be enhanced with advanced capabilities including helicopters and artillery systems. Meanwhile, the UK’s existing HQ in Tallinn will be expanded. Led by a Brigadier, it will support the rapid deployment of high readiness forces at the brigade level.
The UK will also support Estonia with training and logistics, the development of its first divisional-level HQ, as well as developing new ways of fighting through their joint hosting of the Defence Innovation Accelerator for the North Atlantic European HQ, and supporting innovative dual use start-ups through the NATO Innovation Fund.
In addition to increasing its deployments to Estonia, since the Russian invasion the UK has also deployed hundreds of troops to Poland and sent more aircraft to conduct air policing in Romania. Meanwhile, HMS Prince of Wales has led the Alliance’s Maritime High Readiness Force since January 2022.
Funding of £65 million has been provided by the Scottish Government as part of UK’s military aid for Ukraine.
It will make up part of the £1 billion being provided for state of the art equipment including sophisticated air defence systems and thousands of pieces of vital kit for Ukrainian soldiers.
This follows £4 million in financial aid provided by the Scottish Government for humanitarian assistance for Ukraine, and a further £3 million worth of medical supplies.
Finance Secretary Kate Forbes said: “Scotland has been clear from the start that we condemn Russia’s unprovoked, illegal invasion of Ukraine. Scotland stands for democracy, human rights and the rule of law at home and abroad.
“We have become a place of refuge and sanctuary for displaced people from Ukraine, and have done all we can to get help those fleeing the country to escape the violence.
“This further funding is to assist Ukrainian armed forces to fight Russian aggression and the unspeakable brutality being perpetrated.
“We have agreed to providing funding on this occasion given the clear need to maximise the international effort to support Ukraine. However, we are clear that this must not be seen as any kind of precedent which leads to devolved budgets being used to help pay for clearly reserved policy areas.”
The UK will provide £2.5 million for immediate life-saving support to people in Afghanistan affected by the devastating earthquake this week, Foreign Secretary Liz Truss announced yesterday.
At least 1,000 people are reported to have been killed in the disaster in the southeast of the country on Wednesday 22 June and more than 1,400 others injured. These numbers are expected to increase as responders reach the hardest-hit areas.
A total of £2 million will go to the International Federation of the Red Cross (IFRC) to provide shelter, medication, water, sanitation, and other basic needs. The IFRC already has staff and volunteers working on the ground to respond to the crisis and help address the urgent humanitarian needs – including in Khost and Paktika, the 2 provinces most heavily impacted.
A further £500,000 will go to the Norwegian Refugee Council, who are already working on the ground, to provide shelter and cash assistance to those affected.
This support will come from the UK’s aid fund for Afghanistan, which is £286 million this financial year, one of the largest bilateral programmes. Last year the UK’s funding supported emergency health services, water, protection, shelter, food, and education through the UN Afghanistan Humanitarian Fund and World Food Programme.
International partners, including the United Nations and World Food Programme, are coordinating the global response and rapidly assessing the humanitarian needs. The UK is in direct contact with them to offer assistance and stands ready to consider any requests for aid or other help. UK aid was already delivering to the affected areas prior to the earthquake via the UN, NGOs and Red Cross.
Foreign Secretary Liz Truss said: “The recent earthquake is a tragedy for the people of Afghanistan. The scale of need was already severe before the earthquake struck, with more than half of the population requiring humanitarian assistance.
“UK support will enable lifesaving supplies to be provided on the ground. Our aid budget for Afghanistan is one of the UK’s largest bilateral programmes and we will continue to work urgently with our international partners to respond to the unfolding humanitarian crisis.”
The UK co-hosted a high-level international pledging summit with the UN in March 2022, to provide more vital funds. This helped the response to the UN’s appeal of nearly $4.5 billion for Afghanistan, their largest appeal on record for a single country, reflecting the magnitude of the humanitarian challenge that was already facing the country before the earthquake.
UK funding is channelled through UN partners and NGOs. No funding goes to or through the Taliban.
TORIES HAVE LITTLE TO CELEBRATE FOLLOWING BY-ELECTION HAMMERINGS
The UK Government will show its support for Scotland’s agriculture, food, drink and farming sectors when it takes part in the Royal Highland Show.
The four-day event, the first full show since 2019, gives the rural industries and members of the public the chance to speak to Ministers and staff from a range of government departments about what is important to them.
They will also be able to find out more about how the UK Government is delivering for people in Scotland.
Scottish Secretary Alister Jack and UK Government Minister for Scotland Malcolm Offord toured the Ingliston showground yesterday, and today will see UK Government Minister for Scotland Iain Stewart in attendance and Environment Secretary George Eustice is also due at the show.
Between them they’ll be meeting with a range of key stakeholders to discuss issues across agriculture, farming and Scotland’s world famous food and drink sectors, including gene editing technology, which farmers and bodies like the James Hutton Institute have been vocal in supporting.
Ministers will continue to urge the Scottish Government to join the UK Government in introducing legislation to cut red tape and support the development of innovative tech to grow more resistant, more nutritious and more productive crops – reducing the need for pesticides and lowering costs to farmers.
Scottish Secretary Alister Jack said: “It’s fantastic that the Royal Highland Show is back, bigger and better than ever. It’s Scotland’s biggest agriculture event and made even more special this year with it being the 200th anniversary.
“The UK Government will be making full use of this opportunity to meet with key players from the various sectors who make such a huge contribution to our everyday lives and Scotland’s economy.
“It’s vital that the UK and Scottish Governments work together – as well as with businesses – to ensure our rural economy can continue to grow. Gene editing is an area where we can collaborate – and where we can really make a difference as we seek to strengthen our food security, tackle climate change and bring down food prices.
“Gene editing is not genetic modification. It is using science to speed up what farmers have done for generations – breeding new strains of crops that are more disease and drought resistant. The industry in Scotland is clear – it does not want to be left behind.”
Attracting almost 190,000 visitors, Scotland’s biggest outdoor event provides an important platform for show-goers to find out how the UK Government is delivering for people in Scotland.
This year representatives in the UK Government marquee include the department for Business, Energy & Industrial Strategy (BEIS), Border Force, Her Majesty’s Coastguard, HM Revenue & Customs (HMRC), the Department for Transport (DfT), the Department for International Trade (DIT), the Department for Levelling Up, Housing & Communities (DLUHC) and the Department for Work and Pensions (DWP).
The British Armed Forces will also be present.
The Scottish Secretary will also host a reception with the Scotch Whisky Association, showcasing the best of the UK’s biggest food and drink export.
It’s unlikely that the Scottish Secretary, a loyal supporter of PM Boris Johnson, will be particularly keen to discuss last night’s cataclysmic by-election defeats. Doubtless we can expect: ‘mid term election by elections are an opportunity to give the government a kicking … we will listen to the public … we will learn the lessons … get on with the job … etc. .. etc. … etc.
A meeting of the Scottish Government Resilience Room (SGoRR) has been told of the impact of UK-wide rail strikes on Scotland.
Deputy First Minister John Swinney was joined by Ministers including Transport Secretary Michael Matheson and Transport Minister Jenny Gilruth to hear of the latest situation.
The Transport Minister yesterday wrote to the UK Government calling for a swift resolution to the dispute.
Tuesday marked the first of three days of strike action this week, with more planned for Thursday and Saturday with the possibility of further action over the summer. Due to shift patterns the entire week is being disrupted, rather than just the three selected dates.
SGoRR has been up and running since this morning and will be in operation until Sunday evening to monitor impacts and oversee and co-ordinate the response from Ministers.
The meeting also heard about extra preparedness around major events such as the Royal Highland Show, freight mitigation plans from major retailers to keep supermarkets stocked as much as possible, and wider resilience plans.
Speaking after chairing the meeting, Mr Swinney said: “With a busy summer upon us, there needs to be more urgency from UK Ministers and the Department for Transport to get this situation fixed – and fast. The lack of action being taken by the UK Government is a dereliction of duty.
“We have had our own issues in Scotland but the difference between our approach and that of the UK Government could not be more stark. We have sought dialogue, compromise and agreement, whereas the UK Government has deliberately inflamed the situation causing misery for the travelling public.
“This afternoon’s meeting was an opportunity to hear from agencies and responders about the plans that are in place, and I am confident that the mitigations we can take are being taken, but we heard of the serious impact it is having on many areas and sectors of Scotland such as tourism, freight and major events.
“I am grateful to the travelling public for their considerable patience and for checking ahead, seeking alternatives, and working flexibly, where possible. Our resilience arrangements will remain in place for the rest of the week, however I am in no doubt that this situation can and should be addressed by the UK Government.
“The public have suffered enough and our major events organisers need to be able to look and plan ahead with certainty.”
New online tool will show how the take home pay of 30 million people will be boosted by July tax cut.
Workers across the UK will be able to go online, input their salary and see how much they could save thanks to the tax cut which comes in on 6th July.
New Financial Support and Benefits Checker Tool will also help people find the government support they’re eligible for.
The UK Government has launched a new online tool to show how the take home pay of 30 million ‘hard-working Brits’ will be boosted by the imminent £6 billion National Insurance tax cut.
With the historic tax cut just weeks away, the online checker will use salary information to give employees personalised estimates of how much they could save because of the government’s changes.
The cut, which will see the point at which people start paying National Insurance rise to £12,570, is worth up to £330 and seven in ten workers will pay less National Insurance even after accounting for the Health and Social Care Levy.
Rishi Sunak, Chancellor of the Exchequer said: “With our historic £6 billion National Insurance tax cut just weeks away, this new tool will show hard-working Brits how much more of their pay will be going directly into their pocket.
“This tax cut, combined with £400 off energy bills and direct payments of £1,200 to 8 million families, will help shield people from rising prices.”
Alongside this tool, the government has also launched a new Financial Support and Benefits Checker Tool. It enables people to answer 10 simple questions to find out what support they might be eligible for by cross-checking against 25 individual benefits and support offers.
This should help people find out what support they may be eligible for that they may currently not be accessing and is part of the government’s drive to help people manage the increased cost of living.
Both tools will be hosted on the government’s gov.uk Cost of Living page.
The new online tax tool will give personalised estimates for employees paid monthly through the PAYE system of how the tax cut, which comes into effect from 6 July, will boost take home pay. This will help people budget during this challenging time by seeing how much they will be saving in tax.
Everyone who pays National Insurance will see a tax cut, and the tool will show that employee earning up to £51,000 will see this cut more than offset the impact of the Health and Social Care Levy. This means the majority of working people will see a boost to their take home pay.
The tax cut is part of the biggest net cut to personal taxes in a quarter of a century, which was announced by the Chancellor earlier this year, and includes a cut to the basic rate of income tax of 1 percentage point from April 2024. This is the first cut to the basic rate of income tax in 16 years, benefiting 30 million taxpayers by £175 on average.
This tax cut comes on top of the £1,200 in direct payments the Government will provide for the most vulnerable people in the country and universal support worth £400 as a discount on energy bills from October.
This takes total Government support to £37 billion this year, helping tens of millions of people across the country from rising cost of living triggered by Putin’s illegal war in Ukraine.
Millions of people will be protected through strengthening regulation of interest-free Buy-Now Pay-Later credit agreements, under plans announced by the government today.
Lenders will be required to ensure loans are affordable and rules will be amended to ensure advertisements are fair, clear and not misleading.
UK Government will expand rules to cover other forms of unsecured short-term credit that pose similar risks to consumers, such as those used for dentistry work. Millions of people will be protected through strengthening regulation of interest-free Buy-Now Pay-Later credit agreements, under plans announced by the government today (20th June).
Buy-Now Pay-Later credit agreements can be a helpful way to manage your finances, allowing people to spread the full cost of a purchase over time. However, people do not currently have the usual full range of borrower protections when taking out this type of loan and they are rapidly increasing in popularity, resulting in a potential risk of harm to consumers.
Under plans set out by the government today it confirmed that lenders will be required to carry out affordability checks, ensuring loans are affordable for consumers, and will amend financial promotion rules to ensure Buy-Now Pay-Later advertisements are fair, clear, and not misleading. Lenders offering the product will need to be approved by the Financial Conduct Authority (FCA), and borrowers will also be able to take a complaint to the Financial Ombudsman Service (FOS).
Economic Secretary to the Treasury, John Glen said: “Buy-Now Pay-Later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place.
“By holding Buy-Now Pay-Later to the high standards we expect of other loans and forms of credit, we are protecting consumers and fostering the safe growth of this innovative market in the UK.”
Today’s consultation response sets out the government’s proposals for regulation of the sector. Given its complexity, the government will publish a consultation on draft legislation toward the end of this year. Following this, the government aims to lay secondary legislation by mid-2023, after which the FCA will consult on its rules for the sector.
The government has also confirmed that other forms of short-term interest-free credit, such as those used to pay for dental work or larger items like furniture, will be required to comply with the same rules announced today, given the risks posed are similar and consumers should receive consistent protections from similar products.
These rules will apply to businesses who partner with a third-party lender to provide credit, and the government is asking for further stakeholder feedback to confirm whether they should also apply to online merchants who directly offer credit for the purchase of their own products.
Today’s announcement forms part of the government’s plan to grow the economy to tackle the cost of living. The Chancellor has provided £37 billion of support to help, including providing the eight million most vulnerable British families with at least £1,200 of direct payments this year – and giving every household right across the UK £400 to help with their energy bills.
More than eight million households across the whole of the UK will get a cash payment from July to ease cost of living pressures, Work and Pensions Secretary Thérèse Coffey set out detailed plans yesterday.
Millions will receive the first of two cost of living instalments totalling £650 from 14 July 2022, part of the £1,200 support package this year
Initial automatic instalment will be £326, with the rest to follow in a second instalment in the autumn
Comes as part of £37 billion government package to help families with cost of living pressures
The first instalment of the £650 for qualifying low income households in England, Wales, Scotland and Northern Ireland will land in bank accounts from 14 July 2022, continuing to the end of the month.
The move will see millions of households initially £326 better off as the government delivers significant interventions to support groups who are most vulnerable to rising costs. In total, millions of households will receive at least £1,200 from the government this year to help cover rising costs.
Work and Pensions Secretary, Thérèse Coffey said: “With millions of the lowest-income households soon seeing the first of two cash instalments land into their bank accounts, we are taking action to directly help families with the cost of living.
“This one-off payment totalling £650 is part of our £37 billion cost of living support package that will put an extra £1,200 into the pockets of those most in need.”
Chancellor of the Exchequer, Rishi Sunak added: “We have a responsibility to protect those who are paying the highest price for rising inflation, and we are stepping up to help.
“In July over 8 million people will get their first £326 payment to help with rising prices, as part of a package worth at least £1,200 for vulnerable families. I said we would stand by people when they needed help, and we are.”
The second instalment of £324 will be sent to qualifying low income households in the Autumn. The payments are designed to be deliberately slightly unequal to minimise fraud risks from those who may seek to exploit this system.
The eligibility date for the second instalment will be announced soon.
Low-income households are benefiting from government support in a variety of different ways this year as global inflationary pressures, exacerbated by the unjust war in Ukraine, have caused prices to rise for several essentials.
The government understands that many people are worried about the impact these rising prices will have on their household finances, which is why £37 billion of support is being provided to boost budgets and mitigate the worst of these pressures.
Support includes the direct payment of £650 for over 8 million households on benefits, a separate £300 payment for pensioners, and a £150 payment for disabled people, which can be paid on top of the £650 payment.
This is on top of £400 for all households to help with energy bills, and an extra £150 for properties in Council Tax bands A-D, meaning millions of the lowest-income households will receive at least £1,200 in support this year.
This is all in addition to changes to the Universal Credit taper rate and work allowances worth £1,000 a year on average for 1.7 million working claimants, a rise in the National Living Wage to £9.50 an hour, and a tax cut for around 30 million workers through a rise in National Insurance contribution thresholds.
The government has also expanded support for the Household Support Fund – which helps people with food and energy bills – with an extra £421 million, on top of £79 million for devolved nations; the total value of this support now stands at £1.5 billion. Fuel duty was also cut by 5p per litre for 12 months in March 2022, and alcohol duty has been frozen for 2022/23.
You can read more about the UK Government’s cost of living support and what is available here.
