On Wednesday 23rd March, the Chancellor, Rishi Sunak, unveiled his plans for the Spring Statement in the House of Commons. Here are some of the key changes that may have an impact on you:
Fuel Duty Slash
Fuel duty is to be cut by 5p per litre, the biggest cut to rates ever made. This change comes amidst record fuel prices to help mitigate against the increase in costs. The cut will be in place until March 2023.
VAT relief on zero-emissions schemes
Homeowners installing energy-efficient materials to their homes, such as solar panels or heat pumps, will see a cut in VAT from 5% to zero for the next 5 years from April.
National Insurance Contributions Threshold Increases
From April 2022, the threshold at which individuals start paying National Insurance contributions will increase from £9,568 to £9,880. The threshold will then be increased further to £12,570 in July 2022, aligning it with the income tax personal allowance. This will save the average tax payer more than £330 per year.
However, don’t forget that National Insurance is increasing by 1.25 percentage points in 2022/23 to account for the health and social care levy. So overall, you may still be paying more National Insurance than in the 2021/22 tax year.
Basic Rate Tax Reduces
Basic rate tax is set to reduce from 20% to 19% from April 2024. This means that for every £100 individuals earn in the basic rate band (between £12,570 to £50,270 of earnings for the average tax payer), the income tax payable will be £19 instead of £20. This is a net gain for all income tax payers.
These measures have arisen against a backdrop of growing concern over rising living costs, with the Consumer Prices Index (CPI) rising by 6.2% in the 12 months to February 2022. Many other parties and charities have raised concerns that the Chancellor has not provided enough support to households.