Jeremy Hunt unveiled several tax measures in his Budget today including a freeze to fuel duty and a “Brexit pubs guarantee” that will see the tax on draught pints in pubs set up to 11p lower than the duty in supermarkets.
He also revealed tobacco duty would rise in line with retail price inflation (RPI) which stands at 12.7 per cent, plus a minimum extra rise of two per cent that applies to tobacco products.
The price of an average 20-pack of cigarettes will increase from £12.84 to £14.73, a rise of £1.89, from 6pm on Wednesday while a pint will become 11p cheaper but a glass of wine will cost 45p more from August. It is the biggest duty increase for wine in 50 years.
To find out how much tax you could be paying, look below.
You can use the in-depth tool below to calculate how much tax you will pay following Hunt’s Budget announcement:
What was announced about tax today?
Reveals that affect consumers today include a freeze to fuel duty, yet again. The cut will remain at 5p for an additional twelve months, which Hunt says will save drivers £100 a year and £200 since the cut was first introduced.
Petrol prices have dropped from a high point of over £1.91 per litre in July to around £1.48 today – similar to the level we saw about a year ago.
However, it’s still way ahead of the levels we saw just before the pandemic, of around £1.25, so it would have been difficult to convince drivers that now was the time to add another 5p on top of this.
Mr Hunt has also used the freedom to vary taxes outside the EU to cut the cost of beer served in pubs, making alcohol duty 11p a pint less for draft beer than supermarket cans or bottles.
Hard-pressed publicans will breathe a sigh of relief – but the drinks industry faces a headache nonetheless with the pending introduction of a new taxation regime which takes effect in August.
Smokers will also have to fork out nearly £15 for an average pack of cigarettes, after the Chancellor announced that he would raise tobacco duty for the first time since October 2021.
The price of an average 20-pack of cigarettes will increase from £12.84 to £14.73, a rise of £1.89, from 6pm on Wednesday.
What has already been announced about tax?
There were several tax thresholds frozen previously.
At the higher end of the income scale, the threshold for earnings after which the 45 per cent income tax rate applies will be lowered from £150,000 to £125,140 from 6 April.
Therefore, anyone earning more than £150,000 can expect to pay an extra £1,243 a year in tax.
Meanwhile, capital gains tax (CGT) threshold changes from April mean the amount of gains investors can make in a year without CGT will fall from £12,300 to £6,000, and then to £3,000 from April 2024.
What do experts think will happen next?
Taxes will be hiked further, experts say. The era of low taxes is coming to an end and people in the UK will have to get used to paying much higher levels for decades to come, the head of a leading UK economic research institute in the UK has previously told i.
Paul Johnson, of the Institute of Fiscal Studies, said: “Within a couple of years, taxes will be at a record high. With corporation tax and income tax going up so much – and the economy growing so poorly – it is a big and quick change.
“My impression is that neither the electorate nor the government… can see acceptable ways of significantly cutting spending. And if we’re not going to, this shift up in tax… is something that will be permanent.
“It’s one of those difficult things that politicians find hard to talk about. Everyone wants better public services… they also want low tax.”