Budget 2020: What it means for women, from the tampon tax to sick pay

This is what women need to know about how their personal finances will change in 2020, says Rebecca O'Connor

(Rex features)

Chancellor Rishi Sunak’s first Budget been referred to as the coronavirus Budget as the government announced measures to deal with the economic fallout of the Covid-19 virus. The Conservaties announced a £12bn package of emergency support to help the UK cope during the pandemic and the Bank of England cut the base interest rate by half a percentage point as an emergency measure.

Elsewhere, the government announced what the Office for Budget Responsibility has called the “largest fiscal boost for 30 years”, with the chancellor promising to do “whatever it takes to support the economy”, turning away from austerity policies with an injection of spending.

But while promises of £640bn on infrastructure and an extra £6bn to the NHS have been the main talking points of the Conservative government's economic plan, how does Mr Sunak’s first Budget apply to women’s personal finance?

The personal finances of women differ from those of men for a number of reasons. Women tend to be on lower incomes with smaller long-term savings pots; they are more likely to work part-time, be self-employed, have caring duties – either childcare or care for elderly parents and have a need to work flexibly. As a result, women tend to benefit more from policies that focus on these areas.

Many of the measures introduced on Wednesday to mitigate the impact of coronavirus could therefore be of greater benefit to women where more help is offered. Equally, they may be worse off as a result of an absence of help in key areas, like statutory sick pay for the self-employed.

Coronavirus measures

Read more

Women make up a growing proportion of the UK’s self-employed population and, as a result, are generally more vulnerable to lost earnings through illness and caring responsibilities. In the event of school closures and children requiring constant care in the home, it is also likely to be women who end up bearing most of the burden here.

The chancellor also announced measures to alleviate difficulties faced by employees through the increase of statutory sick pay from day one rather than day four of illness being available to all those who are advised to self-isolate.

The Government’s commitment to statutory sick pay does not, unfortunately, apply to the self-employed. For the self-employed who are affected by coronavirus, the Chancellor introduced a benefits boost, enabling quicker payments for Employment and Support Allowance (ESA) claimants and a temporary end to the minimum income floor in universal credit, which effectively means people will be able to claim UC for time they spend off work due to sickness.

Self-employed women and entrepreneurs

Those working from home will benefit from an increase in the flat rate deduction for homeworking from £4 to £6 a week. This is to cover household expenses when working from home and will come into effect in April 2020.

For those setting up their own businesses, the Chancellor also said the Government would increase funding for the Start-Up Loans programme. It will also “explore how to improve the guidance for self-employed people applying for a mortgage”, as well as improving access to finance and credit for the self-employed.

Income boost

Mr Sunak’s announcement of an increase to the National Insurance threshold – the level of income you can earn before you have to start paying National Insurance contributions – has risen from £8,632 to £9,500 – this will instantly mean a tax cut of £104 a year for a typical employee and £78 a year for a self-employed person, according to the Treasury. Women on low incomes below £9,500 (£182.69 a week) will not have to pay NICs, but depending on their level of earnings, might also not be eligible for the state pension as a result.

Tampon tax abolished

The headline-grabbing measure aimed squarely at women in Rishi Sunak’s first Budget as Chancellor was the abolition of the tampon tax – that’s VAT on sanitary wear for women – from January next year. The abolition is the culmination of a long campaign from women’s rights campaigners.

A woman spends approximately £1,614 on sanitary products over her lifetime and £138 on VAT. So the measure is a win for principle and removes the “luxury” classification of sanitary products, but will not make an enormous difference to our pockets.

Domestic abuse and rape victims

For victims of domestic abuse, the Government is introducing an extension to the Shared Accommodation Rate exemption. The shared accommodation rate is the maximum amount of housing benefit or universal credit housing costs you are eligible for when privately renting a room in a shared house. It means that women who have to share accommodation after fleeing abuse will not have their benefit cut according to the type of accommodation they end up living in.

It is also spending £10 million on new preventative approaches and £5 million for domestic abuse courts. Support available for rape victims will be increased to the tune of £15 million.

Women caring for relatives

A consultation on the design of Carer’s Leave was announced. This will give an in-work entitlement for employees who have unpaid caring responsibilities, such as for an elderly parent. This will support hardworking people, “particularly women, who disproportionately undertake unpaid caring activities”, the Budget acknowledged. But we don’t yet know what this will be.

Saving for kids boost

For women with children, the junior ISA maximum subscription – which is the maximum amount you and other relatives can put in a tax-free savings pot for your child every year, tax-free has risen from £4,368 to £9,000. In practice though, the average amount people put in a junior ISA account each year is £994, so for many this increase to the maximum will make little difference. Your child can’t touch the money until they are 18.

New parents

For new parents, the Government said it would “consider how to provide appropriate support to self-employed parents so that they can continue to run their businesses, as part of its wider review of Parental Pay and Leave.” While that doesn’t equal a firm commitment, it at least shows awareness of the problem, which is that self-employed people do not benefit from the enhanced maternity and paternity packages that employed people often receive, meaning they are dependent on statutory pay (which is roughly £150 a week) when they have a baby.

Mums with school-age children

Working mothers with school-age children might benefit from a measure to make Tax-Free Childcare, a scheme that offers a 25 per cent top up to childcare costs, more accessible. The Government has been criticised for not making parents aware of this support, which can help women back to work after looking after children.

A further £2.5 million will go towards helping vulnerable children and their families through the creation of “family hubs”.