The Salary Calculator

How the budget will affect personal finance

by Madaline Dunn

Chancellor Rishi Sunak recently delivered his “wide-ranging” 2021 Budget, and personal finances will be affected in a number of ways. From the national minimum wage to the price of a pint, millions will see changes to the amount of money in their pockets.

So just what is changing? At The Salary Calculator, we’ll give you the rundown. In this article, we’ll explain:

• What changes are being made to the National Minimum Wage and the Living Wage
• How much money will those who claim Universal Credit take home
• What’s going on with alcohol duty
• How travel costs will change

National Minimum Wage and Living Wage changes

The UK’s National Minimum and Living Wage are set to rise, and these changes will come into effect in the next tax year, in April 2022.

The National Living Wage, which refers to the minimum wage those aged 23 and over can earn an hour, will increase by 6.6% from £8.91 to £9.50 an hour. The National Minimum Wage, meanwhile, will increase from £4.62 to £4.81 for those under the age of 18, and from £6.56 to £6.83 for those aged 18 to 20.

Those aged between 20 and 21 will also benefit from a slight increase, with hourly wages rising from £8.36 to £9.18.

Those working as apprentices will see a small increase in their take-home pay, too, with hourly pay increasing from £4.30 to £4.81.

Although Sunak has said that this increase “ensures “the government is “making work pay” and “keeps us on track to meet our target to end low pay by the end of this parliament.” That said, if you think that this wage increase isn’t enough, you’re not alone.

Bridget Phillipson, the shadow chief secretary to the Treasury, has said that the increase is “underwhelming” and, in fact, works out as “£1,000 a year less than Labour’s existing plans for a minimum wage of at least £10 per hour for people working full-time.”

Adding: “Much of it will be swallowed up by the government’s tax rises, universal credit cuts and failure to get a grip on energy bills.”

Similar sentiments have been expressed by the Institute for Fiscal Studies, which has said that the increase won’t be truly felt due to inflation.

Universal credit take home

Following the government’s cut to the Universal Credit boost, which benefited 5.5 million people, Sunak announced there will be changes to the amount of money claimants take home.

Under the current taper rate, for every £1 earned above a threshold for the benefit, a worker misses out on 63p. This is being cut by 8%, meaning it now rests at 55%, down from 63%.

So, according to the government, that means that Universal Credit claimants will keep more of their payment when they find work or receive an increase in their hours. That said, this change benefits just a third of claimants who are worse off since the £20 cut.

The price of a pint

Considering the increase in living costs, cuts to Universal Credit, and the like, news that alcohol duty is being cut is unlikely to feel as exciting as Rishi Sunak has made it sound. Still, from February 2023, there will be what Sunak calls “the most radical simplification of alcohol duties for 140 years.”

This means a pint at your local will, according to the Treasury, will be 3p less dear. Rose, fruit ciders, ‘lower strength,’ beers and wines and liqueurs will also be cheaper.

This change has been made in part to get more people to go out for drinks rather than staying at home.

Changes to travel costs

While the tax on petrol and diesel remains unchanged for the 12th year, at 57.95p per litre, those looking to set their sights a little further than France or Spain are likely to see flight prices hiked. This is because flights over 5,500 miles will see Air Passenger Duty (APD) rise. This is a levy airlines pay, which passengers fund through the cost of plane tickets.

However, duty on domestic flights from April 2023 will be lower, meaning it’s likely that it will be cheaper to fly across the UK.

Tags: Alcohol Duty, Economy, national minimum wage, savings, Travel, Universal credit