Against a backdrop of the continuing pandemic, global supply chain issues, plus significant concerns over rising energy prices and inflation, Chancellor Rishi Sunak has delivered his third UK Budget announcement. Here we’ve summarised the key points which may have an impact on you and your finances.

No change to income tax rates

The Government has again stood by its election promise not to raise income tax rates. But with the thresholds for basic-rate and higher-rate taxpayers in England and Wales staying at £12,570 and £50,270 respectively until 2026, there’s no opportunity to benefit from incremental increases in line with inflation.

Plus, given that we’re currently in a period of rising inflation, in real terms the value of many people’s income may fall.

The Chancellor did announce one major tax cut. The taper rate on universal credit will be reduced from 63 to 55%, a higher level than expected. This benefits individuals who are working while in receipt of universal credit as they get to keep more of the credit.

If you live in Scotland, bands and rates of tax are different. You can find out more about these here.

Temporary National Insurance rises confirmed

In September, the Government announced that from April 2022 National Insurance will rise by 1.25% for employees, employers and the self-employed. This is a temporary move for a year. National Insurance rates will return to their current levels in April 2023 when a separate Health and Social Care Levy is introduced.Lifetime allowance freeze re-confirmed

This is the total amount of pension savings that you can build up across all pension schemes before additional tax charges apply and it will stay at £1,073,100.

Although a pension pot of this size may seem like a significant sum of money, it generally has to last throughout retirement. And while the freeze may only affect a relatively small number of taxpayers, each year that the allowance fails to keep pace with inflation is a step closer to lifetime allowance charges affecting ordinary pension savers.

State Pension to increase

The 2022/23 tax year will see the State Pension rise by 3.1%. This means payments for someone eligible for a full State Pension will increase to £185.15 a week – an annual increase of £288.60. Those who get the older basic State Pension will see it increase to £141.85 a week – an annual increase of £221.

Remember that the current State Pension age is 66, rising to 67 in 2028 .

Some allowances remain unchanged

The yearly ISA (Individual Savings Account) allowance remains unchanged at £20,000. This can go into either a cash or stocks & shares ISA, or a combination of them.

The annual capital gains tax allowance and rates, and the inheritance tax rate and nil rate bands all remain the same.

Some lower-paid set to benefit from pension rebates

Some of those earning less than the personal allowance and paying into a pension were losing out on a valuable tax benefit just because of the type of pension scheme their employer had set up for them. To resolve this, from April 2024, the Government will introduce a system to make payments, equal to the amount of tax benefit lost, directly to low-earning individuals affected by this. However, it isn’t automatic so those affected will need to apply for the payment.

Business rates cut

The Chancellor announced that, in a bid to make business rates fairer, business rates will be re-evaluated every three years. In addition, a new investment relief will mean businesses will be able to make property improvements and pay no extra rates for 2023.

The Chancellor added that the measures, in total, will cut business rates by £7bn and that there’d be ‘key reforms to ease burdens’ of the tax - but that getting rid of the system would be irresponsible since it raises £25bn a year.

The planned increase in the multiplier will also be cancelled . This means a tax cut for business worth £4.6bn over the next five years.

In addition, the increase in corporation tax from 19% to 25% from April 2023 for businesses with profits over £250,000 is re-confirmed.

Planned rise in fuel duty cancelled

As predicted, the Chancellor said that the planned rise in fuel duty will be cancelled, saving £8bn - fuel duty has been frozen for the 12th year in a row. The average car driver will save a total of £1,900.

Changes made to alcohol duty

Somewhat unexpectedly, the Chancellor announced a consultation on simplifying the alcohol duty rules with a move to rates linked to the level of alcohol content. Popular drinks such as prosecco and fruit ciders in particular are set to benefit.

The information in this article should not be regarded as financial advice. Information is based on our understanding in October 2021. Laws and tax rules may change in the future, and depend on individual circumstances. The value of investments can go down as well as up, and could be worth less than was paid in