On October 27th, Chancellor Rishi Sunak will share his plans for the UK’s finances in his Autumn Budget – and with the effects of Covid still being felt, Brexit continuing to make changes and a possible Winter lockdown looming, it’s safe to say the country’s spending won’t be particularly straightforward.

 

The budget comes just weeks after the biggest rise in personal taxes – more on that here – was announced, and schemes such as furlough and the Universal Credit increase came to an end.

 

And while the Chancellor has previously ruled out the return of such initiatives, if previous budgets are anything to go by, there’ll still be a twist or two to come.

 

But what can we predict? We’ve outlined the things we can expect to appear on the agenda…

 

Minimum wage increase

 

After initially increasing the minimum wage to £8.91 for over 23s in his March Budget earlier this year, it’s expected that the rate could be set to rise once again as the Government bows to calls to support workers who have been hit hardest by the pandemic.

 

Reports have indicated that the Chancellor could move to increase the wage to £9.42 an hour, which would be a rise of more than five per cent from its current rate, the third highest annual rise since the financial crash.

 

VAT cut for energy bills

 

With soaring fuel and food costs putting a pinch on spending, the current cost of living crisis is set to be high on Rishi’s agenda this Autumn – and that could include a cut on VAT on energy bills.

 

According to the Financial Times, the Chancellor is facing increasing pressure from MPs to cut the 5 per cent VAT on household energy bills which would help families through the Winter.

 

However, it’s estimated the cut could have an annual cost of around £1.5 billion which, under increasing pressure to get state spending under control, is a burden the Chancellor may not be willing to take on.

 

More tax rises

 

To fund future pledges – and clear some of the country’s financial backlogs – it’s thought that the Chancellor is keen to use tax rises as opposed to borrowing, which could indicate that there is more to come than just the controversial National Insurance increase.

 

While several tax thresholds were frozen in the last Budget, a review from the Office of Tax Simplification (OTS) in 2020 also included aligning Capital Gains Tax (CGT) more closely with income tax rates and reducing the CGT allowance from £12,300 to between £2,000 and £4,000 – could now be the time for the Chancellor to take these recommendations on board?

 

Public sector Pay Freeze ending

 

As the economy looks to bounce back from Covid and private businesses begin to get back on their feet, it’s expected the Chancellor will announce an end date for the public sector pay freeze, which was imposed in November 2020 in the interests of fair wages for all.

 

It’s likely that the pay freeze – which affected over 2.6 million workers, including civil servants, teachers, police officers and more – will be lifted in April.

 

Green initiatives

 

As the country begins to recover from the pandemic, much of our focus is turning to the ever-growing climate crisis.

 

With mounting pressure from the public, MPs and even Royals, it would be a huge surprise if no climate initiatives were announced on October 27th.

 

Possible updates include a replacement for the Green Homes Grant, which offered vouchers for energy-efficient upgrades in households, and changes to green savings bonds.

 

However, with the United Nations Climate Change conference, COP26, being held in Glasgow just days after the Budget, we could see a more dramatic announcement of green initiatives.

 

Stay tuned for all the latest 2022 Budget news as it’s announced.