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How Rishi Sunak becoming Prime Minister affects your finances – three big money decisions being made this week

RISHI Sunak is set to be declared the next Prime Minister of the UK.

But what does it mean for your money? We explain. 

Rishi Sunak is set to be be declared the next Prime Minister of the UK

The ex-chancellor is set to be given the keys to No10, after winning the backing of an overwhelming majority of Tory MPs.

Penny Mordant dropped out of the race at the last minute after failing to secure the support of 100 colleagues.

Before entering politics he was a successful financer, working for investment bank Goldman Sachs and a hedge fund, he then co-founded an investment fund.

During the Covid pandemic as Chancellor, he helped steer the economy through the toughest of times.

But how will today’s announcement affect your finances?

It’s unclear if the Budget will still go ahead on October 31- but the new PM will have some tough decisions to make with his Chancellor. 

We explain three key decisions that Mr Sunak will have to make that will affect your finances.

Last week, current Chancellor Jeremy Hunt announced several u-turns on tax cuts in an effort to calm the markets.

It’s unclear at the moment if Mr Sunak will keep these changes, however, it is thought that he will keep Mr Hunt on as Chancellor in a bid to stabilise the markets .

Benefits – will millions get a pay rise? 

Millions on benefits, including those on Universal Credit, are waiting to hear if their payments will rise in line with inflation. 

The announcement is expected in the Budget next week, but he is expected to confirm that they will. 

For many years, benefits have been raised each April in line with the Consumer Prices Index measure of inflation, using the previous September’s figure. 

Under Liz Truss’ government, ministers said they could not confirm whether this would be the case in 2023. 

Rumours have spread that the government was planning to use a different, lower, measure, raising payments in line with wages instead.

Former Prime Minister Gordon Brown estimates this would leave struggling families £40 a week worse off, or £2,000 a year.

Benefits are already lagging a long way behind runaway living costs, leaving many facing a shortfall.

When they were last increased in April, it was based on the previous September’s figure of 3.1 per cent, but at the time inflation was running three times higher.

Millions will be interested to see next week, which way Mr Sunak will go. 

Pensions – will the triple lock stay?

Millions of pensioners have been worried about whether their payments will rise in line with inflation.

Liz Truss refused to commit to raising state pension payments in line with inflation from April 2023.

Mr Sunak is expected to confirm the triple lock will stay – but the decision is yet to be announced.

The move could mean that those on the new state pension will miss out on as much as £12,296.94 over the next 20 years.

And those on the basic state pension could miss out on £9,421 over the same period.

The triple lock ensures that payments rise each year by whichever is highest of the three figures: inflation, wages or 2.5%.

Inflation fell to 9.9% in August after reaching a 40-year high of 10.1% earlier in July.

Pensioners would be hundreds of pounds a year worse off a year without the triple lock.

National Insurance

Millions of workers are set to benefits from a £330 a year pay boost if the planned cut to National Insurance goes ahead, as expected.

Last week, Mr Hunt said that a 1.25 percentage point rise in National Insurance which took effect in April will still be reversed on November. 

Around 28 million workers across the UK are set to keep an extra £330 a year on average.

Lower earners, on less than £12,570 a year, won’t benefit from the change.

That’s because you don’t pay any tax under this amount which is your tax-free personal allowance.

The initial rise was part of Mr Sunak’s fiscal plan while he was Chancellor. 

Other changes that could affect your finances

Last week, Mr Hunt binned a number of tax cuts and support schemes.

These included a delay to a planned reduction in income tax and reversing a plans to freeze alcohol tax. 

He kept plans to cut stamp duty for all home buyers on properties under £250,000.

He also said that support under the energy price guarantee will only last until April next year, instead of October 2024.

Instead it means that low income households will receive targeted support. 

Mr Sunak may decide to make changes to these policies too, which could be included in the Chancellor’s budget next week.

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