Tax cuts announced to help families with cost of living squeeze
Chancellor Rishi Sunak has pledged to help families suffering from the cost of living squeeze during his Spring Statement.
Speaking in the House of Commons on Wednesday lunchtime (March 23), Sunak announced a raft a measures to try and combat the growing threat.
Sunak said: “Covid and global factors meant that the prices of goods and utilities are already high, but the war in Ukraine has exacewbated this.”
He revealed that inflation will average 7.4% this year, but said that “The Government will support the poeple with rising costs of energy – as we have done for the last two years.”
The Chancellor also announce fuel duty to be cut by 5p per litre, what he called the biggest cut to fuel duty rates ever. The cut will last until March 2023 and, he says, is worth over £5bn. The change will come into effect from 6pm today.
Sunak also announced that for the next five years people wanting to install solar panelsor heat pumps no longer pay any VAT on installation, and that wind and water turbines will also be zero rated.
The Chancellor then announced a hike in the NICs threshold this year by £3,000. People will now be able to earn £12,570 a year without paying any tax or national insurance, which he called “a £330 a year tax cut that rewards work.”Alongside this he announced that the Employment Allowance will increase to £5,000, giving “a new tax cut worth up to £1,000 for half a million small businesses” who have annual Employer NIC bills below £100k.
Richard Whitelock
Looking further to the future he revealed plans to, before the next General Election and for the first time in 16 years, a cut in the basic rate of income tax from 20p to 19p in the pound.
He said: “We want to ensure people are left with more of their own money. It is this Conservative government that is delivering for families.”
Richard Whitelock, head of employer solutions at Azets in Yorkshire said “As predicted, the NIC increase still goes ahead, but the NIC threshold, due to increase by £300, will now increase by £3,000 – matching the current Personal Allowance for Income Tax purposes. This means 70% of workers will have their taxes cut by more than they pay in the new NHS and Social Care levy. In the wider economic circumstances, this is perhaps as far as the Chancellor was able to go, and combined with a promised reduction in income tax by 1p in the £1 is generally positive”.
