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Ahead of Wednesday’s first post-Brexit budget, to be published by the newly appointed Rishi Sunak, The Sun expected a cut in the ‘jobs tax’ while indicating a hike in the employment allowance.

Key quotes

He will raise the Employment Allowance from £3,000 to £4,000 next month, giving firms an immediate reprieve to firms struggling with hikes to the minimum wage and coronavirus.

It means all firms will not have to pay Employer National Insurance Contributions (NICs) – known as the ‘jobs tax’ – on the first £4,000 of their annual bill.

The move was promised in the Tory manifesto but there were fears that it could be delayed after a tax break for firms who employ veterans was pushed back until next year.

But The Sun understands the employment allowance threshold will be raised as promised from next month.

The extra £1,000 buffer is designed to help firms cope with the rise in the minimum wage following last year’s radical decision to raise the minimum wage to £10.50 by 2025.

Next month the minimum wage will rise by 50p to £8.72 – six percent above inflation. The Employment Allowance is designed to help small firms with the cost of employing people.

FX implications

Considering the market’s eyes on coronavirus headlines, news like this fail to offer any major moves. That said, the GBP/USD pair stay mildly under pressure to 1.3100 by the press time.