What's in the budget for you? Alcohol, fuel and flights in charts
Thursday 28 October 2021 02:03, UK
There's been pressure on the chancellor to address the cost of living crisis as families face increasing energy bills and food prices.
In his budget statement to the House of Commons, Rishi Sunak set out a series of tax cuts.
Here we look at how changes to taxes on alcohol, fuel, flights and business rates, among others, impact you.
Alcohol
Taxes from alcohol sales raise about £12bn a year. They're currently taxed depending on alcohol type, whether it is still or sparkling, and how strong it is.
The chart below shows the current system where beer, cider, or still wine could be considered a tax-efficient way to drink alcohol.
The chancellor today announced, for the first time all alcoholic beverages will be taxed in line with their alcohol by volume from February 2023. This means the higher the alcohol content, the higher the tax rate.
"The previous system was a mess. Moving to a system that taxes all drinks in relation to their alcohol content is sensible, while having higher rates on stronger products targets heavy drinkers," said Kate Smith, Associate Director at the Institute for Fiscal Studies.
The government has also announced that it will scrap the previously planned increase in duties from midnight.
In a further boost for the retail and hospitality industry, Mr Sunak has also offered a 50 per cent discount on business rates up to £110,000 for one year. The sector has been one of the worst-hit by the COVID-19 pandemic.
Fuel and flights
The planned increase to fuel duty has been cancelled again - for the 12th consecutive year. It was expected to rise by 2.8p a litre, which would have added £1.30 to the price of filling up the average petrol tank.
The tax already makes up 57.9 pence of the cost, with VAT adding another 23.7p. Mr Sunak said he was "not prepared to add to the squeeze on families and small businesses" after the price of petrol hit a record high average of 142.9p this week.
"Unfortunately, for motorists this isn't going to cut the cost of filling up, just avoids making life even harder overnight," said Sarah Coles, senior personal finance analyst at the stock broker Hargreaves Lansdown.
The chancellor also announced a cut in air passenger duty for domestic flights while adding a new levy on long-haul international flights. The tax cut is expected to benefit nine million people.
But some have questioned the announcement's timing as the UK gears up to host the climate conference COP26 in Glasgow this week.
"It is difficult to hide behind announcements on zero emissions buses and investment in hydrogen when the chancellor suggests the best way to travel domestically and improve UK connectivity is to fly," said Niamh O Regan, researcher at the Social Market Foundation think-tank.
She added: "Cutting Air Passenger Duty on the eve of COP26 sends the wrong message about the UK's Net Zero commitments."
Living standards
The National Living Wage will rise to £9.50 from 1 April - an increase of 6.6 per cent.
While the Labour Party has welcomed the rise, others say a large proportion of the population will continue to face a squeeze on living standards.
The chancellor also tried to scale back the controversial £20-a-week cut to Universal Credit.
He's reduced the taper for welfare payments from 63% to 55% of earnings. So for every extra £1 earned, 55p of Universal Credit will be withdrawn.
But the IFS says those out of work or not earning very much 'won't benefit from this at all.'
According to the think tank, childless people out-of-work, a group whose benefits have not increased in 50 years, will not see any increase.
Despite the additional funding from the chancellor, the IFS says over the next five years, real household disposable income is expected to grow by 0.8% per year, well below the historical average.
Its director Paul Johnson said: "This is actually awful. Yet more years of real incomes barely growing. High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade."
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