Rachel Reeves’ first Labor budget Over the past 14 years, he has implemented several policies that have reduced workers’ disposable incomes – as well as others that could increase them.

Below, I reviews all the key policies that impact workers’ pockets and what they mean.

Additional a tax on employers likely to be passed on to workers

Currently, an employer must pay 13.8 per cent National Insurance (NI) on an employee’s salary above certain thresholds.

But Rachel Reeves increased that figure to 15 percent during the budget. There will also be a significant reduction in the secondary income threshold at which employers start contributing to national insurance, from its current level of £9,100 to £5,000.

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Employers have warned that this additional tax risks being reflected in employees’ salaries in the future.

Helen Miller, of the Institute for Fiscal Studies (IFS), said: “This is a tax on workers’ income. In the long run, it is expected that most of the increase in employers’ NI will be passed on to workers in the form of lower wages.

According to Quilter’s calculations, if an employee’s gross salary is £30,000, the employer will see an increase of £865.80 in their national insurance costs for that employee. The total cost of employing someone on £30,000 will now be £33,750, up from £32,884.20 under the previous rules. If a business wanted to keep costs at the latter figure, an employee’s gross salary would have to fall to £29,247.

To partly offset this, Reeves unveiled an increase in the Small Business Employment Allowance, which allows eligible employers to reduce their National Insurance liability.

She told the Commons: “I am today increasing Employment Allowance from £5,000 to £10,500. This means 865,000 employers will pay no national insurance next year, and more than a million will pay the same or less than before.

“This will allow a small business to employ the equivalent of four full-time workers on the National Living Wage without paying any National Insurance on their wages. »

Bus fare cap rises to £3

Single bus fares on eligible routes will be capped at £3 until the end of 2025, instead of £2 as currently.

The cap will increase at the end of 2024 as the funds needed to keep it at that level run out, Sir Keir Starmer said earlier this week.

The cap applies to some services in England, although some regions, such as Greater Manchester, operate under different rules.

Andy Burnham, the region’s metro mayor, said on Tuesday he would keep fares capped at £2 for the time being.

The national living wage will increase

Rachel Reeves has confirmed a 77p an hour increase for most adults on the minimum wage after accepting the Low Pay Commission’s recommendation. before Wednesday’s budget.

The basic pay for people aged 21 and over, known as the National Living Wage, will increase by 6.7 per cent from £11.44 to £12.21 an hour from April .

Reeves also announced that the national minimum wage for 18 to 20-year-olds would rise to £10 an hour, an increase of £1.40.

The government’s long-term goal is to unify the two wages into a single adult wage rate.

Fuel tax will remain the same

Rachel Reeves has decided not to increase fuel taxes, like several chancellors before her.

This means fuel taxes have not increased for 15 years, after being frozen by Conservative Chancellor George Osborne in 2011.

The Chancellor also maintained a temporary 5p reduction in fuel duty alongside the freeze for a year.

Income tax freeze not extended

The annual amount people can earn before they start paying income tax – the personal allowance – was already frozen until 2028, but it has been suggested that Rachel Reeves will choose to extend this freeze during the Budget .

The tax brackets currently work as follows.

• The basic tax rate which applies from £12,571 to £50,270 is 20 per cent.
• The highest tax rate that applies to £50,271 to £150,000 is 40 per cent.
• The additional tax rate that applies to over £150,000 is currently 45 per cent.

If you earn an average salary of £35,000, freezing the threshold would have meant that by 2030 a typical worker could lose £142 per year, according to Blick Rothenberg calculations.

This means that if the freeze is not extended, they will earn £142 a year if they keep this salary, compared to if the thresholds had been frozen.