RISHI Sunak has set out his Budget 2021 plan to help struggling families and keep British businesses afloat.
Here are five things hidden in official documents – including higher flight costs and no-interest loans.
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1. Universal Credit surplus earnings threshold extended
Universal Credit claimants will continue to get the higher surplus earnings threshold of £2,500 until April 2022.
After this time, it will be reduced to £300.
Surplus earnings are taken into account in your next monthly assessment period for Universal Credit.
For example, if your monthly earnings are more than £2,500 over where your payment stopped – the current threshold – this becomes “surplus earnings”.
These surplus earnings are then carried forward to the following month, where they count towards your earnings.
If your regular income and surplus earnings are then still over the amount where your payment stops, your Universal Credit payment will be affected.
2. Universal Credit MIF suspension extended
Mr Sunak confirmed he won’t reinstate the Universal Credit minimum income floor until the end of July 2021.
It will gradually be reintroduced from August 2021, but Department for Work and Pensions coaches will be given discretion to not apply it on an individual basis.
The minimum income floor was originally meant to be reapplied from April 2021.
It’s the amount you are thought to earn each month, and is used to work out how much Universal Credit you get on top of your earnings.
It applies to those who’ve been self-employed for more than a year.
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3. More time to repay Universal Credit loans
The Chancellor confirmed he is bringing forward several changes to loan repayments, including how soon you have to pay back an advance.
An advance is an upfront loan up to the value of the first Universal Credit amount a person is expected to receive.
Advances currently have to be paid back in instalments from future Universal Credit payments over the next 12 months – but that repayment period is set to increase to 24 months.
Deductions are currently capped at 30% of the standard allowance, but this will reduce to 25%.
The following measures will now come into force from April 2021 instead of October 2021.
4. Air Passenger Duty hike
A family of four will have to shell out an additional £20 to go on holiday.
Taxes on long-haul flights are to rise despite airlines calling for them to be scrapped – though short-haul rates remain frozen.
Air Passenger Duty (APD) rates for departures from Britain will increase by £2 per economy ticket, going from £80 to £82, and by £5, from £176 to £181, for those in premium, business and first class cabins.
This means a family of four on a long-haul flight could be forced to pay an extra £20 for their flights.
However, ADP doesn’t apply on flights back to the UK, or on kids under the age of 16.
The change is in line with the RPI measure of inflation.
5. No interest loan trial
The Government will trial a no-interest loan scheme to help low-income households pay off any unexpected debts.
It has promised £3.8million for the pilot programme to stop vulnerable Brits from falling further into debt.
The Government says the short-term loans would be handed out to help cover any unexpected costs, such as falling behind on rent due to a loss of income.
The loans would support vulnerable customers who would otherwise have to rely on high-cost credit to get them through.
Borrowers who are turned away from traditional high street lenders, for example because they have a poor credit history, often turn to creditors like doorstep lenders, which charge sky-high interest rates.
The extra charges can often leave households spiralling further into debt.
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A Government-funded interest-free loan would reduce the risk of borrowers struggling to keep up with interest charges and would mean Brits only have to pay back what they borrowed.
Wales already offers a similar scheme to tenants who have fallen behind on rent due to the coronavirus crisis.
The Government is yet to release further details on the scheme, such as who is eligible, how much the loans are worth and how long borrowers will have to pay it back.
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