Rishi Sunak delivered his spring budget today (23 March 2022) as inflation hits a 30-year high. Here are the key points to get you up to speed:
- Fuel duty will be cut by 5p a litre
The cut will come into force at 18:00 tonight and last until March next year. This comes after fuel prices have hit a record high with Experian Catalist stating petrol hit a new high of 167p per litre on Sunday, while diesel reached 179p.
- 0% VAT on energy-saving materials
Sunak has said for the next five years, homeowners will pay 0% VAT on energy-saving materials, such as solar panels, heat pumps, and insulation.
- The government’s household support fund will be doubled
The government’s household support fund which provides money to councils to support vulnerable households will be doubled to £1billion from April 2022.
- An increase in the national insurance threshold
The chancellor announced that the threshold for the amount people earn before they pay national insurance will be raised. “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.”
- The 1.25 percentage point rise in national insurance contributions will remain
Sunak says the incoming levy to pay for NHS and social care spending is necessary, as the funding is “needed now”.
- Employment allowance will increase to £5,000
He says 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.
- The basic rate of income tax will be cut
In his final announcement, Sunak says 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. “A tax cut for workers, for pensioners, for savers. A £5bn tax cut for over 30 million people.”
