Here are the key points from Jeremy Hunt's budget:
1. Tax Cuts: The Chancellor announced a 2p cut to the rate of National Insurance paid by employees.
2. Long-term Growth: The budget was set against the backdrop of the UK’s struggling economy, which slipped into a technical recession at the end of 2023.
3. Pensions and Wages: The cap on the amount workers can accumulate in pension savings over their lifetime before having to pay extra tax (currently £1.07m) is to be abolished. The tax-free yearly allowance for pension pot will rise from £40,000 to £60,000.
4. Fuel and Alcohol: Fuel duty is frozen, and the 5p cut to fuel duty on petrol and diesel, due to end in April, is kept for another year. Alcohol taxes will rise in line with inflation from August, with new reliefs for beer, cider, and wine sold in pubs.
5. Energy Bills and Nuclear Power: Government subsidies limiting typical household energy bills to £2,500 a year are extended for three months, until the end of June. There is a commitment to invest £20bn over the next two decades on low-carbon energy projects, with a focus on carbon capture and storage.
6. Childcare and Universal Credit: 30 hours of free childcare for working parents in England is expanded to cover one and two-year-olds, to be rolled out in stages from April 2024. Families on universal credit will receive childcare support up front instead of in arrears, with the £646-a-month per child cap raised to £951.
7. Back to Work Plans: There are new plans for fitness-to-work testing regime to qualify for health-related benefits, a new voluntary employment scheme for disabled people in England and Wales called Universal Support, and tougher requirements to look for work and increased job support for lead child carers on universal credit.
8. Government Debt, Inflation, and Economic Growth: The Office for Budget Responsibility predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%. Growth of 1.8% is predicted for next year, with 2.5% in 2025 and 2.1% in 2026.
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