Today, Rishi Sunak, the chancellor of the exchequer unveiled his spring statement against a backdrop of rising fuel, energy and food costs. We wanted to provide you with a summary of the most poignant points that were made in today’s speech.
Fuel duty cut by 5p per litre
In response to rising fuel paces, the chancellor announced a 5p per litre cut to fuel duty which is “the biggest cuts to all fuel duty rates ever”. The cut will come into force at 18:00 tonight and last until March next year.
0% VAT on energy-saving materials
For the next five years, homeowners will pay 0% VAT on energy saving materials, such as solar panels or heat pumps. The chancellor says he can make the move as a result of Brexit.
Doubles household support fund
Money for councils to support vulnerable households will be doubled to £1bn from April.
Reiterates overall ambition to reduce taxes.
Moving onto the tax system, Sunak reiterates his overall ambition to reduce taxes. He says he is publishing a tax plan today, with a “principled approach” to cutting taxes over this Parliament. This will first help families, then create conditions for higher growth, he says.
National Insurance and income tax threshold is raised.
The chancellor announced that the threshold for paying National Insurance will increase by £3,000 from July 2022. “From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance”, he says. “That’s a £6bn personal tax cut for 30 million people across the United Kingdom. “A tax cut for employees worth over £330 a year”. He adds: “The largest increase in a basic rate threshold ever, and the largest single personal tax cut in a decade”.
Basic rate of tax cut by 2024
In his final announcement, Rishi Sunak said that before the end of this Parliament in 2024, “for the first time in 16 years” the basic rate of income tax will be cut from 20p to 19p in the pound. He added: “A tax cut for workers, for pensioners, for savers. A £5bn tax cut for over 30 million people.”
Support for business
Sunak pledges that the government will reform the generosity of tax credits on the money private firms spend on research and development. He also says the government will cut tax rates on business investment, with details to be set out at the Budget in the autumn.
The Employment Allowance will increase to £5,000, claiming it is a tax cut worth up to £1,000 for half a million small businesses. The new amount will come into place in two weeks’ time.
