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People earning above £19.5k ‘should pay more tax after pandemic’, think-tank says

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Anyone who earns more than £19,500 per year ‘should pay more tax’, according to a plan put forward to help fix the UK’s finances after the Covid-19 pandemic.

A think-tank has put forward a proposal for a £40billion tax hike plan that would help pay back the money used to alleviate the effects of the crisis – which so far has seen record peacetime borrowing.

According to the Resolution Foundation, the country needs a range of tax changes by the middle of the decade to avoid returning to austerity.

The Treasury borrowed £208billion in the first six months of the financial year, which is up £175billion from the same period in 2019, according to the latest official figures.


The think-tank put forward a proposed ‘health and social care levy’, which would see a 4% tax on all incomes over £12,500, offset by both a 3% cut to employee national insurance and getting rid of Class 2 National Insurance contributions for self-employed workers.

It claims the move would not penalise low paid workers and the self-employed – who have been badly affected by restrictions during the pandemic – and that it would raise £17billion annually, with a suggested £6billion going to social care.

The study says: “These offsets would leave employees earning £19,500 and below better off, as well as self-employed workers earning less than £17,000”.

It also suggests a ‘pandemic profit levy’, which would see a windfall tax on firms that have benefited financially from the coronavirus crisis, like supermarkets and private firms on government contracts.


Another suggestion was wealth tax rises of £9billion, with restrictions on capital gains and inheritance tax reliefs, and homes which are worth more than £2million paying an extra council tax supplement.

While Chancellor Rishi Sunak wants to start balancing the books and has warned of hard choices ahead, he also effectively ruled out widespread tax hikes next year – saying the government is committed to supporting the economy and people’s jobs.

James Smith, the Resolution Foundation research director, said: “The Government is rightly focused on fighting Covid-19, and will then need to turn to securing the recovery for several years to come. But the daunting task of repairing the public finances lies ahead, with tax rises of £40 billion likely to be required.

“As well as repairing the public finances, the Chancellor’s consolidation plan should help the country address many of the non-Covid challenges Britain faces – from tackling insecure work to properly funding our social care system, whose weaknesses have been tragically exposed during this crisis.

“To do this, the Chancellor should combine tried-and-tested revenue raisers with major reform of wealth taxation and a new Health and Social Care Levy. This would ensure that post-Covid tax rises reflect the very uneven nature of this crisis, but also play a part in building a better country after it.”

You can read the report in full here.

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Fred Perry is opening a huge new flagship store in Afflecks

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Afflecks / Jody Hartley 

In some good news for our city centre, Fred Perry has announced that it will be opening a huge new store in the Northern Quarter.

The new flagship store will be located at the bottom of the Afflecks building, and is welcome news following the recent closure of high street stalwarts like Debenhams and Topshop.

Fred Perry will be moving from its current location on Police Street to open the new, bigger flagship store on the corner of Oldham Street and Church Street.

The site will see the iconic British brand move into the 2,820 sq ft unit this summer, joining Manchester’s legendary Afflecks which is owned by Bruntwood Works.

Afflecks / Jody Hartley 

Fred Perry was co-founded by the Stockport-born tennis champion of the same name back in the late 1940s, and has gained worldwide fame for its laurel wreath logo and polo shirts.

Richard Gilmore, managing director at Fred Perry, said: “We’re delighted to be moving to the Northern Quarter. The area has no shortage of strong associations to ground-breaking music and subcultural style – something we continue to champion.

“Our retail spaces aren’t just shops, and we’re looking forward to sharing what we do with the Manchester community as part of an exciting continuation of Fred Perry and Afflecks’ mutual commitment to heritage and innovation.

“We now have a space we can be truly proud of in Manchester.”

Charles Roffey / Flickr

Chris Middleton, senior retail manager at Bruntwood Works, added: “Fred Perry is a true icon, and we’re delighted to be welcoming them to the ground floor of our famous Afflecks building.

“The addition of this much-loved brand will bolster the retail community in the Northern Quarter neighbourhood, building on Oldham Street’s offering as a lifestyle-led shopping destination.

“It feels particularly exciting to be announcing the news after what has been a challenging twelve months for retail, as we look forward to a bright future for Manchester city centre.”

The new Fred Perry store will open this summer, although an exact date has yet to be released. 

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People on working tax credits will get a £500 one-off payment, Rishi Sunak confirms

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Number 10/Flickr

Brits on tax credits get a one-off benefits payment of £500, Rishi Sunak reveals in budget. 

Outlined in the budget, Sunak explained that a £20 weekly increase in universal credit will extend for a further six months.

The chancellor explains that by the way Working Tax Credits system works people will not be able to receive the extra £20 weekly. 

Instead, people will benefit from a £500 one-off payment.

Number 10 / Flickr

Mr Sunak said: “To support low-income households, the Universal Credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown

“We’ll provide Working Tax Credit claimants with equivalent support for the next six months.

“Because of the way that system works operationally, we’ll need to do so with a one-off payment of £500.”

The £500 tax credit boost will run in the same way that the Universal Credit is paid – automatically. 

Lots of people have switched from the old ‘Tax Credit’ to the new ‘Universal Credit’ system. Anyone who hasn’t yet been transferred across will now be eligible for this new one-off payment. 

The number of people claiming universal credit in the UK has doubled since the start of the pandemic, reaching 6 million people at the start of this year. 

The extra benefit support is welcomed but many are raising concerns that six months is not long enough.

Sunak also revealed in today’s budget that furlough will be extended until September but employers will have to pay 10% of the employee’s wages in July and 20% in August and September. 

You can see a round-up of all the key points from the budget here

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What Rishi Sunak’s new budget means for people in Greater Manchester

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alvariummcr & flokmcr/Instagram

Rishi Sunak has said he wants to be honest about the government’s plans for fixing the public finances.

The chancellor says there has been ‘acute damage’ to the economy, with more than 700,000 people losing jobs and the economy shrinking by 10% – the largest fall in 300 years.

Borrowing has also been as high as during wartime.

He said: “It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation.”

Here are the key points from his 2021 budget announcement….

The Bay Horse Tavern/Facebook

Furlough

  • Sunak explains that 1.8 million fewer people are expected to be out of work than previously thought, with the peak at 6.5% down from the forecasted peak of 11.9%.
  • Furlough is set to be extended until the end of September this year, however, firms will be asked to contribute 10% of employee’s wages in July and 20% in August and September as the scheme is gradually phased out.
  • A fourth grant worth 80% of average trading profits up to £7,500 covering February to April that will help self-employed people.
  • The £20 increase in universal credit will extend for six months

Business Support

  • Total cash support to businesses has reached £25bn. A further £5bn restart grant has now been confirmed to help companies get going after lockdown.
  • Hospitality and leisure businesses will pay no business rates for three months, then discounted for the remaining nine months of the year by two-thirds.
  • The 5% VAT cut will be extended to the end of September and gradually increased at 12.5% for six months before returning to the normal rate in April 2022.

David Dixon/Geograph

Housing

  • The stamp duty holiday will be extended on properties up to £500,000 to the end of June. It will return to normal levels from October 1st.
  • Mortgage guarantees were also confirmed to help first-time buyers access 95% mortgages, with just 5% deposits.

Public Finances

  • The government will take a ‘fair’ approach to ‘fixing the public finances’ the chancellor confirms.
  • There will be no increase in national insurance, income tax or VAT.
  • The personal allowance will remain at £12,750 until 2026 and the higher rate will increase to £50,270 next year.
  • Inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption thresholds will all be frozen.
  • New minimum wage rates come into force in England on April 1st. Basic rate workers will see a 2.2% increase, with the National Living Wage rising to £8.91 an hour.

David Dixon/Geograph

Borrowing

  • The budget deficit will reach £355billion this year (17% of GDP) – the highest level in peacetime.
  • Sunak said: “It’s going to be the work of many governments over many decades to pay it back, just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked.”

Growth

  • The chancellor explains that the economy will recover more quickly than previously thought.
  • GDP will grow by 4% this year and 7.3% next year according to official forecasts.

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