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Teachers are set to receive their biggest pay rise in fifteen years in a landmark pay deal for the sector.

The Education Secretary has today (21 July) accepted all the recommendations from the independent School Teachers’ Review Body to raise the starting salary for new teachers by 5.5% and increase the upper and lower boundaries of the pay ranges for all other teachers by 2.75%. These recommendations are equivalent to a 3.1% increase in the overall pay bill.

This represents the first step to delivering the Government’s commitment to increase teachers’ starting salaries to £30,000 by 2022/23, with a 5.5% increase worth between £1,341 and £1,677, depending on location.

Education Secretary Gavin Williamson said:

We want to make teaching attractive to the most talented candidates by recognising the outstanding contribution teachers make to our society.

This is why we are introducing the biggest pay rise the profession has seen since 2005, with above-inflation rises to the pay ranges for every single teacher in the country, ahead of introducing a £30,000 starting salary by 2022.

Inspirational teachers change millions of lives by giving our children the drive and desire to learn, and reforms to teacher training, early career support and teachers’ pay are key to the Government’s plans to improve school standards.

The pay increase is equivalent to £1,250 on average for teachers and £1,970 on average for headteachers.

This means the minimum starting salary for a qualified teacher in 2020/21 will rise to £25,714 outside of London, rising to £32,157 in inner London.

The School Teachers’ Review Body has also recommended the introduction of advisory pay points on the main and upper pay range to support schools to adopt a pay structure which best supports recruitment and retention. This sets out a possible pathway of pay progression through which teachers can be recognised and rewarded as they build their expertise in the classroom.

This year’s pay award will be affordable for schools on average across the country, thanks to the Government’s investment in core schools funding, increasing by £2.6 billion this year, £4.8 billion in 2021-22 and £7.1 billion in 2022-23, compared to 2019-20.

Funding to cover past increases to teacher pay and pensions, currently worth £2 billion in separate grant funding, will also be included in the national funding formula from 2021 rather than paid separately, reassuring schools that the funding will continue to be provided in their core budgets.

Yesterday (20 July) the Education Secretary confirmed that next year, mainstream school funding will increase by 4% overall. The national funding formula continues to distribute this fairly, based on the needs of schools and their pupil cohorts. The formula ensures that every school will receive more money for every pupil next year. On average, schools are attracting over 3% more per pupil in 2021-22 compared to in 2020-21.

This announcement comes as almost 900,000 public sector workers, including doctors, teachers and police officers, will see above-inflation pay rises this year.

As part of the Treasury’s long-term tax digitisation plan – designed to boost national productivity, make it easier for businesses and people to pay tax and reduce avoidable errors and fraud – HMRC’s Making Tax Digital programme will be gradually extended.

At present, businesses above the VAT threshold of £85,000 are covered by the system, which requires them to keep digital records and provide VAT returns through software. Since it was introduced in 2019 more than 1.4 million businesses have joined the programme, submitting over 6 million returns.

From April 2022, the programme will be extended to all VAT registered businesses with turnover below the VAT threshold (£85,000), and from April 2023, it will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.

Financial Secretary to the Treasury, Jesse Norman, said:

We are setting out our next steps on Making Tax Digital today, as we bring the UK’s tax system into the 21st century.

Making Tax Digital will make it easier for businesses to keep on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis.

Making Tax Digital changes will affect the way that taxes are reported, not the level of tax that is collected. It will help to minimise avoidable mistakes – which cost the exchequer £8.5 billion in 2018-19.

The long lead-in time will allow businesses, landlords and agents time to plan. It also gives software providers enough notice to bring a range of new products to market, including free software for businesses with the simplest tax affairs.

Over 30% of smaller VAT-registered businesses, who are not yet required to use Making Tax Digital, have chosen to do so voluntarily because of the wider benefits the digital tools offer, including fewer errors and increased productivity.

Other countries have already done this – Denmark introduced a digital system back in 2014, and digital reporting is now well-established and has reduced the amount of time businesses spend on their tax affairs.

The extension is part of a number of announcements which deliver on government commitments and give taxpayers clarity over the future direction of travel. As part of this, the government is today also publishing draft legislation for the next Finance Bill, a regular annual publication.

Notes

To see all new announcements and immediate effect measures please see here Written Ministerial Statement

To see draft Finance Bill 2020-21 legislation and supporting documents Finance Bill