UK chancellor Rishi Sunak unveiled the government's annual budget in parliament on Wednesday.
The blockbuster announcement contained a raft of changes to taxes and welfare, alongside new spending announcements. Sunak announced what amounts to stealth tax rises on income, inheritance, capital gains, and pensions, while at the same time offering more support to low-income workers and those struggling due to COVID-19.
Here's how Tuesday's budget will affect your finances:
Stealth tax rises for workers, investors, and savers
The chancellor didn't increase taxes — bar corporation tax — in Wednesday's budget but he announced what amounts to a stealth tax rise in a number of areas.
Sunak said the income tax personal allowance, the pension lifetime allowance, the inheritance tax threshold, and the capital gains tax allowance would all be frozen at their current levels until 2026.
"Nobody’s take home pay will be less than it is now, as a result of this policy," Sunak assured people when he announce the income tax allowance freeze.
However, inflation means that while headline pay won't shrink, real take home incomes will decline as the allowance fails to keep up with rising wage and price inflation.
“In practice, as wages and asset prices increase with inflation, keeping bands and allowances in the deep freezer for five years means more people will pay taxes at higher rates," said Iain McCluskey, a tax partner at PwC.
"For example, the freezing of the tax free personal allowance alone could mean a 40% taxpayer paying an additional £400 of tax a year by 2026 with modest wage growth of 2% a year."
WATCH: Personal tax thresholds frozen
The Office for Budget Responsibility estimates the freeze will mean 1.3 million low earning workers will have to start paying income tax, while the higher rate tax bracket should grow by 1 million. The Treasury estimates the income tax freeze will raise an extra £19bn ($27bn) for the government by 2026.
The same dynamic applies to the other tax freezes. By failing to raise allowances in-line with growth, people will end up paying more tax on inheritances and pension savings, and higher capital gains tax on things like share sales or second home transactions.
Raj Mody, global head of pensions at PwC, said the freeze on allowances for retirement savings would mean "senior doctors and teachers will be caught as much as private sector middle managers."
“Generation X — those currently working in their 40s and 50s and who may have already suffered other consequences from the pandemic — will be directly affected," he said. "Someone aged 50 now could be £85,000 worse off in tax by the time they reach retirement, if the lifetime allowance stays fixed."
Becky O’Connor, head of pensions and savings at interactive investor, said Sunak had opted for "a back-handed way of raising taxes."
Boost for furloughed workers and the self-employed
An estimated 4.7 million people were on furlough at the end of January and millions of self-employed people have been struggling throughout the pandemic.
Sunak gave both groups a leg-up in the budget by extending support schemes. The chancellor confirmed that the coronavirus job support scheme would be extended until September and announced a fifth self-employed income support grant.
An extra 600,000 self-employed people have also been added to the pool of people eligible for grants. The expansion is down to the fact that the government now includes people who became self-employed in the 2019/20 tax year.
The extension of furlough and changes to the self-employed income support scheme are estimated to deliver a boost of £20bn to struggling workers.
WATCH: Sunak extends furlough scheme
More help for the unemployed and low-income workers
The government extended welfare support for those struggling in low-income work and those out of work.
The temporary £20 uplift in universal credit has been extended for another six months and people claiming working tax credit will receive a one-off payment of £500.
The national living wage will also increase from £8.72 to £8.91 per hour from April.
Boost for first time buyers and property owners looking to move
Some of the biggest giveaways in the budget were for property owners and aspiring property owners.
The stamp duty freeze will continue until the end of June, the chancellor said, with the nil rate band set at £250,000 – double its standard level – until the end of September.
First time buyers or those with small amounts of savings looking to move were also given a boost. The chancellor announced a new government guarantee scheme that will allow people to secure mortgages on properties worth up to £600,000 with a deposit of just 5%. Sunak said the first banks to operate the scheme will begin offering mortgages under the scheme from next week, including Britain's biggest mortgage lender Lloyds Bank.
WATCH: What does stamp duty cut holiday extension mean for home buyers?
Tax break for drivers and drinkers
Fuel duty is set to be frozen for the 11th year in a row. Alcohol duties have also been frozen for the second year in a row. The Treasury said this would save drinkers an estimated £1.7bn.
The temporary 5% rate of VAT has also been extended until the end of September, which will keep the price of most goods down.
Mixed picture for business owners
Businesses owners face a mixed picture. On the one hand, companies face an increase in corporation tax to 25% by 2023. On the other, the chancellor announced what he called the "biggest tax break cut in modern British history" for business.
The new "super deduction" allows a company to claim 130% of any business investment off their tax bill. The tax break is worth £25bn.
Corporation taxes changes have also been tiered and the chancellor said "70% of companies — 1.4 million businesses — will be completely unaffected."
Elsewhere, the chancellor extended various support grants and tax breaks, such as business rates, to help businesses, particularly those on the high street.