The Chancellor of the Exchequer, Rishi Sunak, presented the Spring Statement to Parliament yesterday afternoon. The Chancellor describes this Spring Statement as offering people ‘security’ through the UK’s response to the war in Ukraine, a faster growing economy, more resilient public finances and help with the cost of living for working families. OBR Economic Forecasts In its economic forecasts, the OBR notes that “Given the evolving situation in the war in Ukraine and the global response, there is significant uncertainty around the outlook for global Gross Domestic Product (GDP).” Tax and National Insurance
The starting point for individuals to pay NI contributions is to be equalised with the income tax personal allowance from July 2022.
This will increase the NI Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, from £9880 to £12,570.
There is no change to employer NI contributions and the planned increase to NI contributions is to go ahead from April 2022.
From April 2022, self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will not pay class 2 NI contributions.
The basic rate of income tax is to be cut from 20% to 19% by the end of this Parliament (April 2024).
Retail hospitality and leisure sectors will have a 50% discount in business rates up to £110,000.
The Treasury has also published a Spring Statement Tax Plan which is intended to strengthen the economy over the rest of this Parliament and is made up of three parts:
- Cost of Living: helping families with the cost of living
- Capital, People, Ideas: Creating the conditions for private sector led growth
- And Sharing Growth: Letting people keep more of what they earn
Fuel Duty to be cut by 5p per litre from this evening until March 2023.
Additional £500 million is to be put into the Household Support Fund, which allows councils to help poorer families with the cost of essentials such as food, clothing and utilities.
VAT is to be removed from April 2022 on home energy-saving measures such as insulation, solar panels and heat pumps.