Spring Statement Round Up 2022

With the economy still recovering from the COVID pandemic and the full impact of the Ukraine war yet to feed into the public finances, many people are keen to know just what changes the Chancellor has planned and how they might be affected. This blog post looks at some of the announcements that are likely to have the biggest impact on your household budget.

1. Increase of £3,000 in the National Insurance threshold

From July, individuals will be able to earn £12,570 before paying any National Insurance Contributions (NICS). This brings the threshold into alignment with the Income Tax threshold, giving the average employee a tax cut worth around £330 per year.

2. 5p reduction in fuel duty.

Prices at the petrol pumps have been increasing at an eye-watering rate since the end of February 2022, with the average price of a litre of unleaded around £1.65p. From 6pm on 23rd March, the tax on fuel will be reduced by 5p per litre, a saving which should be passed on to motorists on garage forecourts. This translates to a saving of around £3 when filling the average family car. 

3. £500m available to support vulnerable households

Mr Sunak recently announced a fund of £500m to support households suffering from rising costs of living. This Spring Statement increases the funding available to £1m which will be distributed from April by local authorities to families most in need. 



4. Income tax cut of 1p

Whilst the Chancellor announce a reduction in the basic rate of income tax of 1p, he stopped short of saying exactly when this would be implemented, stating only that it would be brought in before the end of the current Parliament in 2024. So we can’t all rush out and spend or invest that money just yet.

5. VAT scrapped on home energy-saving measures.

With the energy crisis likely to deepen, households are looking for ways to reduce energy usage and improve the energy efficiency of their homes. VAT will be scrapped on materials such as solar panels, heat pumps and insulation in a bid to encourage more households to adopt renewables or more energy efficient options.

6. Business rates discount

For some businesses - retail, leisure and hospitality, there is a 50% discount in business rates up to £110,000 as these sectors continue to recover from the past two years.

7. Employment allowance

The employment allowance has been increased from £4000 to £5000. This allows eligible employers to reduce their Class 1 National Insurance liability helping small businesses to cope with spiralling overheads.

8. Forecast for inflation, growth and debt

The Office for Budget Responsibility estimates the following important headline figures for the coming year:

Inflation 7.4%

Growth 3.8%

Debt interest £83bn

9. No change

Despite many calls from the opposition parties to scrap the hike, Rishi Sunak is resolute on the subject of the 1.25% increase in National Insurance due to take place on 1st April. This is mitigated in part by the threshold increase which will help low and middle income households.