Yesterday, the Chancellor, Rishi Sunak, delivered his Spring Statement to set out the Treasury’s plans. The statement comes amid uncertainty in the global economy following the Russian invasion of Ukraine, just as the UK recovers from the effects of the pandemic.
The Spring statement set out a range of measures, including an announcement on fuel duty, VAT and national insurance. There was also a pledge regarding the future of income tax.
The major announcements in the Spring Statement were:
- Fuel Duty – cut by 5 pence per litre. This will last one year, until March 2023.
- National Insurance Contribution – the NI personal threshold will rise from £9,500 to £12,750 from July. This brings the thresholds in line with Income Tax.
- Household Support Fund (HSF) – the HSF will be doubled to £1 billion, with £500 million of new funding available to local authorities in April. This allows local authorities to target support to those who need it.
- VAT relief on energy saving measures – For the next 5 years, the 5 per cent VAT rate on energy saving products will be cut to 0%. This includes products such as solar panels, alongside wind and water turbines.
- Employment Allowance – From April, the employment allowance will increase to £5000. This is a tax cut worth up to £1,000 for around half a million small businesses.
- Income Tax – the Chancellor has pledged to cut the basic rate of income tax to 19 pence in 2024.
These announcements are on top of measures already announced earlier to help with the cost of living, such as the Energy Bills Rebate, the National Living Wage increase, and the reduction of the Universal Credit taper rate.
You can read further information here: Chancellor announces tax cuts to support families with cost of living - GOV.UK (www.gov.uk)
You can read the full Spring Statement policy documents here: Spring Statement 2022: documents - GOV.UK (www.gov.uk)
You can read the Chancellor’s speech to the House of Commons here: Spring Statement 2022 speech - GOV.UK (www.gov.uk)
---
