The government has announced tax changes in response to growing living costs. Despite unveiling in his Spring Statement on March 23rd, a raft of new tax measures that will benefit millions of Britons, Chancellor of the Exchequer Rishi Sunak has been criticised for not going far enough.
Many people are experiencing terrible economic times as a result of international developments. In the United Kingdom, the cost of living has risen by about 6.2 percent in the last year. This is the most rapid increase in 30 years. The increase is due to global supply chain challenges caused by the pandemic and the war in Ukraine, which have resulted in price increases for many everyday necessities like fuel, energy, and food.
“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”Rishi Sunak, Chancellor of the Exchequer
Specifically, Sunak’s new tax plan includes the following provisions…
- National Insurance starting thresholds will increase to £12,570 from £9,600 in July 2022. As a result, 70% of workers would pay less, while 2.2 million people will be exempt from paying anything. Approximately 30 million workers will save an average of £330 as a result of the adjustment.
- Fuel duty and petrol will be reduced by 5p per litre from March 23, 2022. This is the largest historical reduction in fuel duty rates, totaling £2.4 billion. The average one-car family will save £100, according to estimates.
- The basic rate of income tax will be reduced from 20p to 19p in the pound beginning in 2024. This is estimated to result in a total savings of almost £5 billion for 30 million people, with the typical person saving around £175.
Sunak also unveiled a slew of initiatives aimed at assisting firms with investment, innovation, and expansion. Among these measures is a £4,000 rise in the employment allowance to £5,000, which will benefit about 500,000 small businesses.
“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”Rishi Sunak, Chancellor of the Exchequer
The Office for Budget Responsibility calculates that the net tax cuts announced in the statement only amount to a sixth of the net tax increases introduced by Sunak since he became chancellor. A YouGov poll immediately after the Spring statement was made found as many as two-thirds of those polled believed they will not benefit much, or at all, from the measures.