BBC News recently hosted a Q&A session with a panel of experts after Chancellor Jeremy Hunt’s Budget, where they explained what it means for people’s finances. Here are some of the questions posed:
– Why do I have to pay income tax on my state pension benefit due to tax thresholds being frozen?
The Institute for Fiscal Studies point out that more than 60% of pensioners pay income tax, with many more now being dragged into paying tax due to the freezing of tax thresholds. The IFS says that most tax-paying pensioners will be around £650 a year worse off by 2027 as a result.
– Why is the vaping tax delayed until October 2026?
The duty on vaping will not begin immediately, but instead, it will start in October 2026. The government has estimated that this duty will raise £120 million in the first year, rising to £445 million in 2028-29. The process starts with a 12-week consultation, followed by a government response, which will all take time.
– Is the increase in the threshold for child benefit for any individual parent, or is it worked out on both parents’ income added together?
The threshold is based on one parent’s income, not the combined income of two parents. From April, two parents earning £59,000 each (totalling £118,000) will still receive full child benefit. A single parent or single earner on £80,000 or more will not receive anything. The government has said it plans to move to a system of household income by April 2026.
– Why are the lowest earners worse off?
The tax threshold freeze has a big effect on the first few thousand pounds paid in tax, which is worse for low earners. The cut in National Insurance (NI) has a smaller effect on this group but saves a higher earner £1,500 a year. So, the cut to NI does not make up for the extra tax being paid on the first few thousand pounds above the lower tax threshold, meaning the lower earners are worse off. Higher earners, however, benefit from this cut.
– How do the two cuts to National Insurance affect contributions to the NHS and pensions?
Although the cuts to National Insurance are beneficial to workers on the receiving end, there are no negative consequences for contributions to the NHS or pensions
Read the full article from The BBC here: Read More