Chancellor’s Spring Statement to ease the rising cost of living – but is it enough?
- Tax cut for nearly 30 million UK workers through rise in National Insurance thresholds – saving the typical employee over £330 in the year from July
- Tax Plan unveiled to give families further help with the cost of living
- Fuel duty on petrol and diesel reduced by 5p per litre for the next year
- £5 billion income tax cut from 2024
- £1,000 increase to Employment Allowance to benefit around half a million SMEs.
Personal Tax threshold increases
Rishi Sunak announced that National Insurance starting thresholds will rise to £12,570 from July 2022. Meaning that you will be able to keep more of what you earn before you start paying personal taxes.
The cut, worth over £6 billion, will benefit almost 30 million working people, with a typical employee saving over £330 in the year from July. Result!
Fuel duty for petrol and diesel will be cut
Fuel duty for petrol and diesel will be cut by 5p per litre from 6 pm 23 March for 12 months to help drivers across the UK with rising costs – a tax cut worth £2.4 billion. This is the biggest cut ever on all fuel duty rates and means a one-car family will now save on average £100.
Basic rate of income tax cut to help you keep more of what you earn
The basic rate of income tax will also be cut by 1p in the pound in 2024. The historic £5 billion tax cut for workers, pensioners and savers will be worth £175 on average for 30 million people and will be the first cut to the basic rate in 16 years. A number of years off yet, and it is hoped the economy will be faring better to accommodate this tax cut.
Increase in Employment Allowance
The Chancellor also set out a series of measures to help businesses boost investment, innovation, and growth. Including a £1,000 increase in Employment Allowance to benefit around half a million smaller firms on 6th April.
Delivering the Spring Statement, Chancellor Rishi Sunak said:
This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century.
Like our actions against Russia, I have been able to do this because of our strong economy and the difficult but responsible decisions I have had to make to rebuild our finances following the pandemic.
Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come.
What’s driving up the cost of living
The Chancellor said that global supply chain issues following the pandemic, as well as Russia’s invasion of Ukraine, are driving up the cost of living for families across the UK.
Household Support Fund
An extra £500 million is now available for the Household Support Fund. Doubling its total amount to £1 billion to support the most vulnerable families with their essentials over the coming months.
VAT reduced on energy-saving materials from 5% to 0% for 5 years
The Chancellor also reduced the VAT on energy-saving materials such as solar panels, heating pumps and roof insulation from 5% to zero for five years, helping families become more energy-efficient.
Other measures recently introduced:
- £9 billion energy bill rebate package, worth up to £350 each for around 28 million households.
- An increase to the National Living Wage, worth £1,000 for full-time workers.
- A cut to the Universal Credit taper, worth £1,000 for two million families.
So what can we be doing to help ourselves?
The Spring Statement from the Chancellor seems to be helping in small ways but is it really enough when the price of living is increasing, and there are threats of a recession looming.
Recently on BBC Radio 5 Live with Laura Whitmore, I said that this is the time to increase your income. Check what benefits or tax credits/breaks you may be entitled to. Are you eligible for the working from home tax? Housing benefits? Uniform allowance? It’s time to not just manage your income and outgoings, but also try to work out how to make this year easier for you and loved ones.