With prices rising at the fastest rate in 30 years the Chancellor Rishi Sunak stood up today to give his Spring Statement.
The Chancellor said that we can expect economic growth this year to be 3.8% with a smaller rise in 2023 of 1.8%. Meanwhile, inflation is predicted to average 7.4% for the rest of the year.
Among the headlines are:
- The threshold for paying National Insurance (NI) will rise by £3,000 to £12,570, matching the income tax threshold rate.
- The Employment Allowance – a relief which allows smaller businesses to reduce their employers NI contribution bill each year – will increase from £4,000 to £5,000 from 6 April.
- Fuel duty is being cut by 5p a litre from 6pm tonight until March 2023.
- Income tax to be reduced from 20p to 19p in 2024.
- There will be zero VAT on installing energy efficiency materials such as solar panels, heat pumps and insulation.
- The Household Support Fund for local councils to support the most vulnerable will be doubled to £1 billion from this April.
Delivering his Spring Statement, the Chancellor said: “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.
“Like our actions against Russia, I have been able to do this because of our strong economy and the difficult but responsible decisions I have had to make to rebuild our finances following the pandemic.
“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.”
However, commenting on the statement and its impact for business, Toby Ryland, corporate tax partner at accountancy firm HW Fisher said: “There was little to no cheer for businesses in the Spring Statement today. There were small promises to increase R&D and capital investment expected later this year, however given the pressure to increase employee salaries immediately the financial strain on businesses remains acute. Any tax incentives that are introduced in the Autumn may well be cancelled out in short order by the rise in corporation tax from 19% to 25% in April 2023. All the focus is on income tax, but it’s a missed opportunity for businesses who face a looming increase to their tax bill.”
