Autumn Budget and Spending Review 2021

Rishi Sunak has presented the public with a Budget for a “new age”, one which he says will prepare the country for a post-Covid “age of optimism”.
The Chancellor delivered us what at first glance appeared to be some good news, a £150bn spending rise with extra money for schools, tax cuts for businesses and an economy set to hit pre-Covid levels by the end of the year.
The OBR also predicts that real household disposable incomes (i.e. after inflation) will rise by just 1.1% this year, and by just 0.3% in 2022, after shrinking by 0.6% last year.
We have summarised the key points from the Budget. The full Budget report can be read by visiting https://www.gov.uk/government/topical-events/autumn-budget-and-spending-review-2021
The Economy
The economy is set to hit pre-Covid level by the end of the Annual growth is set to rebound by 6.5% this year, followed by 6% in 2022.
The levels of unemployment is expected to peak at 2% next year, but this figure is lower than 11.9% previously predicted.
Wages have grown by real terms by 3.4% since February 2020.
Borrowing as a percentage of GDP is forecast to fall from 9% this year to 3.3% next year. Borrowing as a percentage of GDP will then fall in the following four years to 1.5%.
Tax
In the Spring budget it was announced that the thresholds at which income tax is paid would be frozen at April 2021 levels for five years. That means pay rises will push more people into higher tax bands.
In September, the government also announced employees, employers and the self-employed would all pay 1.25p more in the pound for National Insurance (NI) from April 2022 to fund social care.
• Inheritance Tax, a tax usually paid on an estate after death, remained unchanged despite the nil-rate band not increasing since It sits at £325,000, with a 40% rate due on estates over that value, with additional allowances for married couples.
• No changes to capital gains tax.
Government Spending
Whitehall departments to receive rise in overall spending, totalling £150bn over the course of this Parliament.
Schools to get an extra £4.7bn by 2024-25.
£6bn of funding to help tackle the NHS backlog.
£7bn for transport projects in areas including Greater Manchester, the West Midlands and South Yorkshire.
Pensions
The state pension will rise by 1% in the 2022-23 tax year, equating to an annual boost of £289 for pensioners.
Documents published alongside the Chancellor’s Budget today confirmed that, for this year only, the increase will not be determined by the usual triple lock guarantee, in order to avoid a ‘disproportionately inflated rise’.
Core pension tax-relief systems and rules for inheriting pensions have been left unchanged, despite considerable speculation that the government would make these arrangements less generous.
Wages
Those on minimum wage will receive a pay rise. For those aged 23 and above, the rate will go up by 6.7%, as the hourly rate increases from £8.91 to £9.50 per hour.
Living Costs
Petrol: The planned rise in fuel duty is to be cancelled as the country faces the highest pump prices in eight years.
Air Travel: The cost of a domestic flight ticket could be cut, but very long-haul flights could become more expensive. This is because the changes to Air Passenger Duty, a levy paid by airlines, is ultimately funded by passengers through the cost of their tickets.
Alcohol and tobacco: Planned rise in the duty on spirits, wine, cider and beer cancelled. Higher- strength drinks going up in price, but lower duty on drinks ranging from sparkling wine to draught beer. The cost of smoking is rising again, with an above-inflation rise in duty on cigarettes and hand-rolling tobacco.