Spring Statement: Highlights of Rishi Sunak’s “Mini Budget”
Chancellor Rishi Sunak today unveiled his much-anticipated spring declaration amid rising fuel, energy and food costs.
Shortly before Sunak’s statement – touted by the national press as a “mini-budget” – the challenge facing the chancellor was “revealed,” the Office for National Statistics confirmed inflation hit a 30-year high and is up 6.2% in the 12 months to February, the said BBC.
It appears that for the “umpteenth time” in Sunak’s two years at the Treasury Ministry, what should have been a “modest” fiscal event has been “events transformed” – like the cost-of-living crisis exacerbated by the war in Ukraine – into something “much more ambitious,” he said Andrew Sparrow in The guardbefore the statement.
Finally, some much-anticipated actions To help those coping with the rising cost of living, the Chancellor introduced measures such as a fuel tax cut, a raise in the National Insurance (NI) threshold and a promise to reduce the property tax rate by 2024. But the social security tax, which many across the political spectrum have called for postponement or scrapping, has remained.
Fuel tax reduction
The Chancellor’s first big headline announcement was a 5p per liter fuel tax cut, which he described as “the biggest cut of any fuel tax rate ever”. The cut, which Sunak says was worth over £5bn, will apply for a year until March 2023 and will come into effect from 6pm tonight.
The RAC has said the 5p fuel tax cut “will take £3.30 off the cost of filling a typical 55-litre family car”.
Removed VAT on energy-saving devices
Households now pay 0% VAT on energy-saving appliances such as solar panels and heat pumps, which the Chancellor says could save up to £1,000 on the cost of installing solar panels. He said the policy highlighted the “deficiencies” in the policy Northern Ireland Protocolas it could not be immediately applied to Northern Ireland – which will nonetheless receive equivalent funding.
Budget support fund doubled
The Budget Support Fund gets £500m in new money, bringing support to poorer families to £1bn. Councils are due to receive the additional funds in April, Sunak said.
Raising the NI threshold
The planned social security Hike to pay for NHS health and social care was not delayed or removed as many had hoped and called for – Sunak said the extra funding it would provide to the NHS was ‘needed now’. But he said raising the NI was “not inconsistent with lowering taxes on working families.”
In one of his biggest announcements in the spring statement, the Chancellor said he would raise the threshold for NI payments by £3,000 – a significant increase from the planned £300 threshold increase. The change allows people to earn £12,570 before NI becomes payable.
“That’s a $6 billion personal tax cut.”
However, The Guardian reported that the increase in the threshold will not take effect in time for the new tax year in April, but will apply from July. According to the Treasury Department, this is “the earliest date that all payroll software developers and employers can update their systems and make changes,” the paper said.
help for business
Sunak pledged to “reform” the R&D tax break for private companies, potentially making it more generous in the fall budget. He also announced cuts in business investment tax rates in the autumn and a £5,000 increase in employment support for small businesses.
Reduction of the basic tax rate by 2024
The base rate of income tax will be cut from 20p to 19p before the end of the current parliamentary term, the Chancellor announced, hailing it as a “tax cut for workers, pensioners, savers” and a “£5 billion” tax cut for over 30 million people “.
The promised basic income tax cut – which the chancellor noted has only been cut twice in the past 20 years – was Sunak’s “rabbit out of the hat” moment, Sunak said Sky news‘s political correspondent Beth Rigby.
But she asked “how difficult will it be for families to make ends meet in the next two years” before the promised tax cuts take effect? the BBC‘s Laura Kuenssberg noted that it is “unusual policy to make that kind of commitment in two years’ time” – likely to come into effect in time for a general election.
https://www.theweek.co.uk/news/economy/956183/spring-statement-highlights Spring Statement: Highlights of Rishi Sunak’s “Mini Budget”