Chancellor Rishi Sunak's Budget has the country set for a flat recovery for living standards amid fears the average household could see their tax rise by thousands of pounds during Boris Johnson's premiership, the Office for Budget Responsibility (OBR) has warned.

The Resolution Foundation said this burden combined with higher growth, inflation and public spending than previously expected prompted it to warn "that Britain could be set for a flat recovery for household living standards".

The foundation's analysis found the Chancellor's plans will mean by 2026-27 tax as a share of the economy will be at its highest level since 1950, amounting to a £3,000 increase per household since Boris Johnson became Prime Minister.

Rishi Sunak announced several changes that will give people both more and less money in their pockets
Rishi Sunak announced several changes that will give people both more and less money in their pockets

But what does that mean for you?

Mr Sunak announced several policies that will give households both more and less money in their pockets over the coming months which we have summarised below.

If you're on Universal Credit

If you are getting back into work but are still on Universal Credit, you could be left with a pretty big windfall.

Universal Credit starts to be phased out when you start earning again. For every £1 you earn, your Universal Credit was in the past cut by 63p.

This figure, known as the Universal Credit earnings taper rate, will be reduced to 55p, leaving you with an extra 8p per pound to spend.

If your energy bills are going up

As shadow chancellor Rachel Reeves pointed out after his speech, Mr Sunak did not make any promises to help households with the runaway bills sparked by a spike in wholesale gas prices.

From April the price cap on energy bills is expected to rise to around £1,660 for an average household, from £1,277 today.

A Treasury paper acknowledged that European gas prices had risen by 471% in the year to September, but it did not announce any steps to reduce soaring gas bills.

If you drive - or fly - within the UK

The price of petrol is likely to be lower after the Chancellor announced he was scrapping a planned hike in fuel duty.

Mr Sunak said he would freeze fuel duty at 57.95p per litre for the year ending March 2023. The decision comes after petrol prices pushed to their highest point in eight years late last week.

Controversially, days before the UN climate change summit in Glasgow (COP26), the Chancellor also said he would cut air passenger duty for domestic flights by 50% to £6.50.

If you like a tipple

If fortified wine or high strength white cider are your thing, your drinks tab is about to go up. The UK Government will increase tax on these because of their high alcohol content.

But lower-alcohol drinks such as fruit cider, liqueur and rose wine will have lower taxes.

If you like craft cider you might also see your bills go down as small producers will for the first time be eligible for tax relief.

Draught beer served in pubs will also see a duty cut, the Chancellor said. The reforms will come into effect in February 2023.

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