With the cost of living sky rocketing at the moment, it’s fair to say that all eyes were on the Chancellor as he stood up to deliver this year’s Spring Statement. In normal times (who can remember those eh!), nothing much would come from these statements, as all the big information was released in the Budget. However, it was clear that this statement would have to be different, as many families are in fear of plunging into poverty with rising energy, fuel and food costs.
And after a slow start (which we must confess, did have this author shouting ‘is that it?’ at the TV!), a number of measures that will have a direct, relatively immediate impact on people’s finances were announced.
The headline measure has to be the Increase of the National Insurance threshold
From July 2022, the National Insurance threshold will be raised from £9,880 to £12,570, bringing it in line with the income tax personal allowance. This means that for most, the first £12,570 of their income will be tax and NI free, equating to an average saving of £330/year.
The Health and Social Care Levy (an extra 1.25 percentage points added to the NI rate (12% increased to 13.25%) from 6th April 2022) has not been scrapped, so those who do end up paying NI, will still pay that extra amount, but for many, this will be negated by the savings made with the rise in NI threshold.
From 6th April 2022, the Employment Allowance will increase from £4,000 to £5,000, meaning that it will be cheaper for businesses to employ staff, with eligible employers able to reduce their NI liability by £5,000.
From 6pm on the 23rd March 2022, fuel duty will be cut by 5p until March 2023.
VAT Reduction on Energy Saving Materials
For the next 5 years, homeowners will not have to pay any VAT on the installation of energy saving materials such as solar panels (down from 5%).
Household Support Fund
The Household Support Fund, which is available to local authorities to help vulnerable families at their choosing, is to be doubled to £1billion.
The Chancellor also announced some longer term plans:
- From 2024, it is planned that income tax will reduce from 20% to 19%.
- R&D tax credits to be reformed to make them ‘more generous but better value for money’.
- Tax rates on business investments to be cut in the Autumn Budget, after consultations with businesses over the best way to do this.
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