Spring Statement 2022 – Sunak raises National Insurance threshold to £12,570 and promises to cut basic rate of income tax by end of this parliament

Chancellor Rishi Sunak’s Spring Statement comes at a time that UK, and indeed much of the world, is facing rising prices and high inflation.

The key points of the Chancellor’s statement are as follows:

• The income threshold for when you start paying National Insurance will rise to £12,570 in July. However, once you start paying National Insurance, the rate will be higher than it was last year (13.25% instead of 12%).
• Fuel duty will be cut by 5p per litre until March 2023.
• Homeowners will not pay VAT on green home improvements such as solar panels, heat pumps and insulation.
• Local authorities will get another £500m for the Household Support Fund from April.
• A temporary business rates relief will come into effect in April 2022 for retail, hospitality and leisure businesses.
• The employment allowance will be increased to £5,000 from April 2022.

The Office for Budget Responsibility predicts that high inflation along with higher taxes from April will mean households face the biggest fall in living standards since records began. However, Sunak argues that 70% of workers, those earning earn less than £34,000, will be better off as they will get an effective tax cut with the rise in the threshold for paying National Insurance (NI) by £3,000.

Sunak also used the statement to pledge to cut the basic rate of income tax from 20p to 19p in the pound before the end of this Parliament

You can read the full Spring Statement, published on the Government website on the 23rd March 2022 here.