Concerned Martin Lewis confirms salary you must lose after spring declaration

Money-saving expert Martin Lewis has voiced his concerns about the Chancellor’s spring declaration, listing the top five issues that will impact people’s personal finances

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Spring Statement: Martin Lewis responds to Sunak’s announcements

Chancellor Rishi Sunak has delivered his spring declaration today, announcing changes to income tax, fuel tax and social security.

According to the statement, Money Saving Expert martin lewis has shared his “instinctive reaction” to what Sunak had said – and his response is worrying for some.

In a video posted to social media, Lewis shared the top five points from the statement that would impact people’s personal finances.

The clip is gone viral, Thousands of likes and hundreds of comments, many thanking the 49-year-old for his work.

He explained: “The Chancellor just settled into his spring statement with five key announcements affecting people’s personal finances, so I wanted to give you my first instinctive reaction to what he said.”

His first point focused on national insurance and how it should increase by 1.25 percentage points.

Martin shared a worrying reaction to the spring declaration

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“The big problem was national insurance,” Lewis said. “Now it has been pre-announced and very controversial that Social Security will increase by 1.25 percentage points, which will increase the level of Social Security, which is effectively an income tax on these people, by about 10%. People will pay about 10% more Social Security because of this increase.

“That’s still in effect, but to mitigate it the Chancellor changed the threshold from which you start paying. So today you pay National Insurance as soon as you earn about £9,600 a year and you start paying income tax once you earn about £12,600 a year. He’s moving as of July, so these two levels will be equal, which is reasonable.

“That means you now don’t pay Social Security until you make around £12,600 from July, £3,000 more than now. The saving from that is £360, but of course once you start paying Social Security the 1.25 percentage point more that people will pay, people will pay more.”

So where does it even out?

Lewis claims if you earn between £9,600 and £35,000 you either don’t pay more National Insurance than you currently do, or if you’re on the lower end you pay less.

It’s bad news for those earning over £35,000, however, as the 1.25 percentage point increase ‘outweighs’ the change in the starting threshold, meaning you’ll pay more.

“The breakeven point is around £35,000,” he says. “If you’re under it’s a game, if you’re over it the two measures are a loss for you.”

Martin’s video went viral

His next point focused on the 5p fuel tax cut and how motorists across the country will pay less to fill up their tanks from now on.

This was a slightly more positive point for people as it means that “5p less duty goes to the Chancellor and 5p more goes into people’s pockets”.

Lewis calculated that there would probably be a saving of “just over a pound” on a typical gas tank being filled.

The third item dealt with the announcement that VAT would be eliminated on household energy efficiency measures such as solar panels and heat pumps.

He commented that this was a “relatively small” point and that it would only be beneficial to “those who could afford to insulate or have better energy efficiency measures in place,” adding: “Nobody will be left with a huge one in the short term.” reviving the increased energy bills we are facing.”

Fourth was a look at the £500m donated to the budget support front which helps vulnerable people.

Lewis hoped this would target household bills and encouraged people to contact their local councils about this if they were struggling to pay energy bills on a lower income.

“I know some communities have almost run out of those funds so more money is coming to support you and it’s worth speaking to your community.

“That’s it in terms of energy, so energy, not particularly generous.”

Finally, Lewis briefly mentioned Rishi’s ‘rabbit out of a hat’ announcement that income tax will drop to 19p from 2024.

He didn’t want to comment too much on this, however, as it’s still a few years away.

He added: “We know that in April we will get the £150 council tax refund for those in bands A to D. You get them in cash if you pay by direct debit, if you don’t pay by direct debit then you’ll probably be told how to claim it and if you don’t claim it you’ll get it as a discount.

“And then there’s the more controversial £200 loan, no loan scheme, which is coming in October. So limited help for energy. But I think what the chancellor would argue is, well, there’s the budget support fund to help the most vulnerable in energy and cutting government insurance should make up for that a bit. None of this is going to fully offset the rising energy bills that hit October likely to increase by £1,300 a year, but it will moderate them somewhat.

“And then his bunny is out of the hat that from 2024 what will likely be an election year income tax rate is the base income tax drop to 19p. I don’t intend to talk too much about the fact that it’s been a long time since anyone else is right now.

“So that’s my rough summary of what’s happening, I hope it helps.”

What do you think of the spring declaration? Let us know in the comments below.

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