10 ways Rishi could put a smile on our faces with his Autumn Budget
Rishi’s under pressure to balance the books in next week’s Budget… Here’s 10 cheap and cheerful ways he could put a smile on our faces
Doubling the Christmas pension bonus to £20 would cost around £130mA 5% cut in beer duty would knock 2p off the price of a pint and cost just £54m Axing 5% VAT on domestic energy bills would save the average household £60 Scrapping Stamp Duty for downsizers could free up family-sized housing
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The nation needs cheering up. Not long after a global health catastrophe, and we are already facing a cost of living crisis as bills and prices soar.
What’s more, Chancellor Rishi Sunak could inflict yet more misery next week with his Autumn Budget statement on Wednesday.
The country’s finances are facing an unprecedented squeeze after the Government spent hundreds of billions during the pandemic.
Balancing act: Chancellor Rishi Sunak could pile on the misery next week with his Autumn Budget statement on Wednesday
But here, Money Mail points out that there are some giveaways which could help households better manage a bleak winter — at little cost to the Treasury.
1. Double the Christmas bonus
Those claiming benefits including the state pension have received a £10 Christmas bonus every year since 1972.
Yet had the value of this festive gift risen with inflation, it would now be worth £145.
Doubling it to £20 would cost the Government at least an extra £130 million a year — a fraction of the hundreds of billions of pounds that the Chancellor has at his disposal.
Cheers: A 5 per cent cut in beer duty would knock 2p off the price of a pint
2. Swallow beer price rises
The price of an average pint of lager is expected to head above £4 as taxes and shortages push up costs for pubs.
Inflation is due to hit at least 4 per cent by the end of the year and the cost of carbon dioxide (CO2), which puts the fizz in beer and sodas, is also rising.
So, a cut in booze duties could help make the nation merry. Rishi has already been rumoured to be considering simplifying the alcohol tax system, which would save drinkers on the price of sparkling wine and beer.
A 5 per cent cut in beer duty would knock 2p off the price of a pint and cost the Government just £54 million a year after new jobs and extra spending are taken into account, the British Beer and Pub Association says.
3. VAT-free energy bills
Record wholesale gas prices have forced up energy bills for millions of us by hundreds of pounds. The Government currently collects VAT at a rate of 5 per cent on domestic energy bills.
Axeing this completely would cost the Government around £1.7 billion and save the average household more than £60.
There have been rumblings this week that the Chancellor has been considering this to ease the pressure on struggling families.
Adding a third £1 million prize to NS&I’s monthly Premium Bonds would cost £12 million a year
4. Boost Premium Bond prizes
The Treasury could add a third £1 million prize to NS&I’s monthly Premium Bonds draw to mark 65 years of the nation’s favourite savings product.
Increasing the prize fund in this way would cost £12 million a year.
Sarah Coles, from investment service Hargreaves Lansdown, says: ‘By far the most common reason people like Premium Bonds is the outside chance of a major prize, so improving the odds, even just for a short period, would offer hope at a time when it’s in short supply elsewhere.’
The Chancellor could also raise NS&I’s fundraising target to allow it to offer better prize odds.
If the Government’s savings arm raised the prize rate by 0.5 per cent , a saver with the maximum £50,000 deposit could expect to win an extra £250 a year.
5. Child benefit charge change
Currently families in which one parent earns more than £50,000 have to start paying back some child benefit cash.
If one parent earns more than £60,000 they have to repay it all. The benefit is worth more than £1,000 a year for the first child and more than £800 for each child thereafter.
But the £50,000 high income child benefit charge threshold has not risen since it was introduced in 2013.
It now catches basic-rate taxpayers as the high rate taxpayer threshold has risen to £50,270.
If the Chancellor hiked the threshold with inflation to £60,000, more than 350,000 families would be spared, at a cost of less than £1 billion a year to the Government.
First-time buyers using a Lifetime Isa to save for a home deposit can put away a maximum of £4,000 a year
6. Help for housing
First-time buyers using a Lifetime Isa to save for a home deposit can put away a maximum of £4,000 a year and receive a 25 per cent bonus from the Government.
Sean McCann, of insurer NFU Mutual, says doubling the savings allowance and increasing the annual bonus to £2,000 would be a welcome boost for those struggling to get on the property ladder.
More than 223,000 savers have a Lifetime Isa, so doubling the allowance could cost the Government more than £2.2 million a year.
7. A great green rate
Savers have been promised the chance to invest in Green Bonds with NS&I but the rate on offer has not yet been revealed.
Ms Coles says: ‘Setting the interest rate on Green Bonds at a market-leading level would be a brilliant boon for savers struggling to find much to get excited about in the savings market at the moment.
After six more years of rock bottom rates, savers need this pick-me-up even more, so a generous market-leading rate would be a shot in the arm.’
Increasing the minimum employer contribution rate to 5 per cent will mean more than ten million get a 2 per cent pay rise
8. A pension pay rise
More than ten million workers have been helped to start saving for retirement thanks to auto enrolment.
But employers are only obliged to pay in 3 per cent of a worker’s salary while the employee has to pay at least 5 per cent.
Increasing the minimum employer contribution rate to 5 per cent will mean more than ten million get a 2 per cent pay rise — albeit delayed until retirement.
This cash could increase the retirement fund of an average worker by £232,193.
It would add 2 per cent to the wage bills of private sector employers and mean the Government misses out on some income as pension savings receive tax relief.
9. Slash tax for downsizers
Stamp duty often puts older homeowners off downsizing, and so they stay in larger houses than they perhaps need.
The tax is levied on properties bought worth more than £125,000 at 2 per cent, and rises to 12 per cent on homes sold for more than £1.5 million.
Scrapping it for downsizers could generate the Government money by freeing up family-sized housing and stimulating the market.
Rebecca O’Connor, head of pensions and savings at Interactive Investor, says that downsizing is a good way of funding retirement for those without enough pension income.
10. Fix low net earnings issue
An anomaly means some low earners who earn above the automatic enrolment trigger of £10,000, but below the personal tax allowance of £12,570, do not receive tax relief on their pension contributions.
The issue, which largely affects women and denies savers a 20 per cent boost to their pension payments, occurs when the worker’s employer has put them in a ‘net pay’ pension scheme.
The Government has promised to fix the problem, which would cost it £95 million a year in tax.
In the past financial year, the anomaly meant 1.5 million people lost £62.50 each, says wealth management firm Quilter.
b.wilkinson@dailymail.co.uk
