// Sunak introduced measures designed to ease the cost-of-living crisis, including increasing the National Insurance threshold, and cutting fuel duty and the basic income rate
// The Spring Statement was unveiled as it emerged that inflation had risen at the fastest rate in 30 years
Chancellor Rishi Sunak has raised the earnings threshold before National Insurance needs to be paid and cut fuel duty in a bid to ease the cost-of-living crisis.
Pressure had been building on Sunak to offer relief in the face of rising inflation, which it was revealed today rose at the fastest rate for 30 years due to surging fuel, energy and food costs.
Sunak said the changes to National Insurance, which would allow people to earn £12,570 a year without paying any income tax or National Insurance, a £3,000 hike, represented a £6 billion personal tax cut for 30 million people in the UK. He said this would save consumers more than £330.
The government is also cutting the basic income tax from 20p to 19p in the pound to 2024 to help consumers.
Meanwhile, cutting fuel duty by 5p per litre, which Sunak said was the biggest cut to the duty ever, will save motorists £5 billion.
The cut, which comes into force from 6pm tonight and will remain in place until next March, could also help retailers who are facing rising supply chain costs.
The government is also doubling the Household Support Fund, which helps the poorest in society, to £1 billion to help with the cost-of-living squeeze.
Other policies were introduced designed to help small businesses, including retailers.
The Employment Allowance – a relief which allows smaller businesses to reduce their employers National Insurance contributions bills each year – will increase by £1,000 to £5,000 from next month.
This comes on top of 50% business rates relief for eligible retail, hospitality, and leisure properties, also coming in this April, which is worth £1.7 billion for small businesses.
The key points made in the Spring Statement
- By 2024, basic rate of income tax to be cut from 20p to 19p in the pound
- Employment Allowance for small businesses will increase to £5000 from next month
- Small retailers among businesses to receive a 50% discount on their business rates bill from April
- Rishi Sunak – “We should be prepared for the economy and public finances to worsen”
- As part of its new tax plan, people will be able to earn £12,570 a year without paying any income tax or National Insurance from July. Sunak said this represents a £6 billion personal tax cut for 30 million people in the UK and is worth £330 a year
- The government is doubling the Household Support Fund to £1 billion. This will allow Local Authorities to help those in need in their local areas
- £500 million of the funding will go to local authorities from April to help with cost-of-living crisis
- OBR forecasts economy to grow by 3.8% this year
- Unemployment is forecast to be lower than pre-pandemic levels
- The government will cut fuel duty by 5p per litre, the biggest cut to the duty ever. Sunak said that the tax cut was save motorists £5 billion. The cut will be in force for the next 12 months and will be introduced from 6pm tonight
- “Too early” to tell the full impact of the Ukraine war on the UK economy
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