In response to the rising cost of living, the government has announced tax cuts that will affect millions of Britons. Chancellor of the Exchequer Rishi Sunak announced new tax plans in the Spring Statement on 23rd March.
The changes come amid difficult economic times for many people. In a span of 12 months, the cost of living has increased approximately 6.2 per cent in the UK. This represents the fastest increase in 30 years. The surge stems from global supply chain issues following the pandemic and the war in Ukraine, which have resulted in rising prices for many daily essentials, such as fuel, energy and food.
‘This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century’, Sunak said.
Specifically, Sunak’s new tax plan includes the following provisions:
- Starting in July 2022, the National Insurance starting thresholds will rise to £12,570 from £9,600. As a result, 70 per cent of workers will pay less and 2.2 million people will no longer be responsible for any payment. Overall, the change will result in approximately 30 million workers saving an average of £330.
- Starting on 23rd March 2022, fuel duty and petrol will be cut by 5p per litre. This is the largest ever cut on fuel duty rates and is worth approximately £2.4 billion. It’s estimated that the typical one-car family will save an average of £100.
- Starting in 2024, the basic rate of income tax will decrease from 20p to 19p in the pound. This is expected to result in approximately £5 billion in total savings across 30 million people, with the average person saving approximately £175.
Furthermore, Sunak announced a number of measures intended to help businesses with investment, innovation and growth. These efforts include an increase to employment allowance from £4,000 to £5,000, which will benefit approximately 500,000 small firms.
‘Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come’, Sunak said.
For more information related to managing costs and financial well-being, contact us today.