Spring Statement 2022: Everything you need to know

Photo: BBC

Chancellor of the Exchequer Rishi Sunak

Chancellor Rishi Sunak outlined his Spring Statement in the House of Commons yesterday (23 March).

The chancellor has announced he will cut fuel duty, raise the threshold at which people start paying National Insurance, and has pledged to cut the basic rate of income tax before the next general election.

Britons are facing a cost of living crisis as prices have risen by 6.2% in the 12 months to February 2022, the fastest rate of inflation for 30 years. The chancellor’s spring statement has confirmed that people should prepare for things to become more expensive at a faster rate later in the year.

Official forecasts from the Office for Budget Responsibility, suggest inflation (which charts the rising cost of living) will average 7.4% this year, peaking at around 9% at the end of the year. The Office for Budget Responsibility says inflation and higher taxes from April mean households face the biggest fall in living standards since records began.

The National Insurance starting threshold will rise to £12,570 from July, the same level as income tax starts being paid. Presently, most people start paying National Insurance contributions when their income hits £9,568. Then people pay 12% of earnings between £9,568 and £50,270, then 2% on any earnings above this. This move is expected to benefit some 70% of workers.

Fuel duty for petrol and diesel will be cut by 5p per litre from 6pm on 23 March, one of the largest cuts ever on all fuel duty rates.

The basic rate of income tax will also be cut in 2024 – from 20p to 19p – the first cut to the basic rate in 16 years. This cut is expected to save £175 on average for 30 million people.

The Employment Allowance – a relief which allows smaller businesses to reduce their employers' National Insurance contributions bills each year – will be increased from £4,000 to £5,000.

The cut is worth up to £1,000 for half a million smaller businesses and starts in two weeks’ time, on 6 April.

Delivering the Spring Statement, Chancellor Rishi Sunak 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.

“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.”