SPRING STATEMENT IN BRIEF: The key points of the Chancellor’s speech and what it means for you
Chancellor Rishi Sunak stood up to deliver a high-pressure Spring Statement at just after 12.30 today.
He said his aim was to tackle the cost of living crisis and the biggest news was the raising of the National Insurance threshold to £12,570, which comes into play in July.
A planned 1.25 percentage point rise on National Insurance rates will still arrive in April though. The new rates will be 13.25 per cent from £112,570 to £50,000 and 3.25 per cent above £50,000.
A 5p fuel duty cut for a year was also announced and a commitment to lower the basic rate of income tax from 20p to 19p by the end of the parliament.
Below we itemise the key announcements.
How much will you save or lose from the National Insurance changes? From April 1.25% will be added to NI rates but from July the lower threshold will rise to £12,570. Our table shows how people will be affected per month at different income levels once both changes are in
As households across the country face a growing cost-of-living crisis, Chancellor Rishi Sunak reveals the Government’s response
Key measures at a glance
- Impact of Ukraine war
- ‘Sanctions of unprecedented scale and scope’ – these sanctions are working but ‘are not cost free for us at home’
- It presents a risk for our recovery, which had been growing faster than expected before the invasion
- It is too early to know the full impact of the war on the UK economy
- OBR: UK GDP growth of 3.8 per cent this year – down from forecast of 6 per cent – then will be 1.8 per cent, 2.1 per cent and 1.8 per cent in the following three years
- Lower growth outlook has not affected our strong jobs performance
- OBR: 7.4 per cent inflation average
- Public finances will worsen significantly as cost of financing debt grows
Energy costs
- £9billion plan to help 28million households to pay around half of April energy price cap
- Motorists, fuel duty cut 5p per litre – in place until March next year from 6pm tonight
- For next five years, no more 5 per cent VAT on energy efficiency products such as insulation and solar panels – However, Northern Ireland Protocol means this will not apply to the province.
Taxes
- Increase in National Insurance threshold: ‘From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance,’ says Sunak.
- Income tax basic rate cut from 20 per cent to 19 per cent
- Business tax cuts coming this Autumn
- Retail, hospitality and leisure industry to get 50 per cent cut on business rates up to £110k
- Small businesses’ employment allowance increase to £5,000, worth up to £1,000 per business
- Tax plans will help families with cost of living, create conditions for higher growth, and share proceeds for growth fairly, Sunak says
- Increase NICS threshold by £3,000, equalising threshold with income tax
- Levy to pay for NHS and social care spending
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