The Spring Statement isn’t generally a time for large budget measures but in these unusual times several were announced, largely aimed at consumers rather than businesses. The most important changes are:
Headline news is cutting fuel duty for petrol and diesel by 5p per litre across the whole of the UK.
Overall, this is the biggest cut, in cash terms, that has ever been applied across all fuel duty rates at once. However, in reality with the cost of a litre of fuel having risen by around 30p in the past few weeks it’s a small dent in an otherwise massive price hike, but should still be appreciated.
This cut, plus the freeze in fuel duty in 2022-23, is worth around:
- £100 for the average car driver
- £200 for the average van driver
- £1,500 for the average haulier
Raising National insurance thresholds
National Insurance starting thresholds will rise to £12,570 from July 2022. The cut will benefit 30 million working people with a typical employee saving over £330 a year. This however won’t help the very lowest earners – if you earn less than £9,880 raising the threshold doesn’t help. For those earning more it should be a saving and mitigate the 1.25% raise for health and social care.
Read more on how it impacts the self employed here.
Universal Credit taper rate
The government are reducing the Universal Credit taper rate from 63% to 55% and increasing work allowances by £500 per annum from late 2021. This is effectively a tax cut for the lowest paid in society worth around £1.9 billion in 2022-23. This change also means that 1.7 million households will on average keep around an extra £1,000 on an annual basis.
The Household Support Fund
The Spring Statement is doubling the Household Support Fund to £1billion by providing an extra £500 million from April 2022, on top of the £500 million already provided since October 2021. The Fund will help households with the cost of essentials such as food, clothing and utilities and, in England, will continue to be distributed to Local Authorities, who are best placed to direct help to those who need it most.
Increasing the Employment Allowance from £4,000 to £5,000
Employment Allowance is a relief which allows eligible businesses to reduce their employer National Insurance contributions (NICs) bills each year .At Spring Statement it was announced this would be rising by £1,000 from £4,000
Around 495,000 businesses (30% of all businesses) will benefit from this increase, including around 50,000 businesses (3% of all businesses) which will be taken out of paying NICs and the Health and Social Care Levy entirely. In total, this means that from April, 670,000 businesses will not pay NICs and the Health and Social Care Levy due to the Employment Allowance