Chancellor Rishi Sunak delivered his Spring Statement this week, announcing a number of tax cuts to Parliament to deal with the cost of living crisis.
Just after figures showed inflation was 6.2%, Sunak revealed that the payment threshold for National Insurance threshold would increase to £12,570 from July 2022 – equal to the threshold for income tax.
He also revealed the rate of income tax will be reduced from 20% to 19% in April 2024, which would see the average taxpayer benefit from £175 a year, according to the Government.
To combat the rising price of fuel, the Government has cut fuel duty by 5p, which kicked in on the evening of the address.
Meanwhile, homeowners installing energy saving materials to their home, such as solar panels and insulation, will pay no VAT on those products for the next 5 years in a bid to help households manage their energy bills.
The Chancellor also unveiled a Spring Statement tax plan, which set out a timeline for future tax policy for business investment, R&D tax relief and the apprenticeship levy.
Paul Johnson, director of the Institute of Fiscal Affairs said:
“If Sunak wants to be remembered as a tax reforming chancellor, so far he is headed in the wrong direction.
“The combination of increased NI rates and a reduced income tax rate will make the tax system both less equitable and less efficient.”
Talk to us about your financial situation.
