uk iconUK

Millions to benefit from pay rise and tax cuts

About 2.1 million people are set to benefit from this week’s National Minimum Wage and National Living Wage increases, said the HM Treasury.

Millions to benefit from pay rise and tax cuts
smsfadviser logo

Over 30 million people are set to benefit from the increase to the personal allowance and higher rate threshold this month, as Chancellor of the Exchequer Philip Hammond delivers on a manifesto commitment one year early.

Britain’s workers will also benefit from the biggest increase to the National Living Wage since it was introduced, rising by almost 5 per cent to £8.21 per hour. This inflation-busting pay rise means a full-time National Living Wage worker will earn an extra £690 over a year, the HM Treasury revealed. 

It noted that the National Minimum Wage has increased faster than inflation. This includes increases to £7.70 per hour for 21 to 24-year-olds and £6.15 for 18 to 20-year-olds, with workers in the retail and hospitality sectors due to benefit the most. Taken together with the National Living Wage rise, in total 2.1 million people are set to get a pay rise.

"Thanks to our careful management of the public finances and the hard work of the British people, we can afford to cut taxes for millions, increase the wages of the lowest paid, and cut business rates for small retailers," said Mr Hammond.

Financial Secretary to the Treasury, Mel Stride, said that the budget was drafted "for the strivers and the workers who keep the country going". 

"From this month we’ve introduced tax cuts, increased wages and boosted support for small retailers to ensure people keep more of the money they work hard to earn," Mr Stride said. 

He explained that this is good news for Britain’s businesses, too. 

"The government’s plan for the High Street is cutting costs by £1 billion over the next two years by giving small retailers a third off their business rates bills. Together with other rates reforms and cuts introduced since 2016, this is saving businesses over £13 billion over the next five years," Mr Stride said. 

Alongside these changes, the government is also increasing investment in key public services. The start of the new financial year means nearly £1.1 billion extra funding for the police, access to £1.3 billion more for local councils, and £1.1 billion extra for schools.

"This is all part of the government’s balanced approach, getting debt falling while investing in vital public services and keeping taxes low for people, families and businesses," Mr Stride concluded. 

Subscribe to Financial Accountant

Receive the latest news, opinion and features directly to your inbox