The Chancellor Rishi Sunak opened his Spring Statement with positive comments on record UK economic growth, lower unemployment that is set to continue to fall and the negative side of price rises post Brexit, covid-19 supply issues and now energy prices with the Russian energy supply/sanctions as well as more expensive government borrowing costs, despite lower borrowing, with interest rate and inflationary increases.
Let's look at what directly affects your pocket today:
Health & Social Care Levy
The 1.25% increase to both employers and employees National Insurance Contributions, total 2.5% as well as self employed NIC rates on lower-level threshold and upper-level profits at 1.25% and the dividend tax increase of 1.25% are all staying, no change. The Chancellor confirmed that every penny will go to the NHS and social care. It is well documented that in recovering from Covid-19 and lockdowns, the NHS has an immense backlog for medical treatment and operations. It makes no sense to defer this when we all may need either NHS or social care at any time and these areas need extra funding right now.
Chancellor Rishi Sunak announced he is lifting the National Insurance threshold by £3,000. Current threshold £9,568 – was due to go up £300 but now up £3,000 – to £12,568 – or will they just round it up to £12,570 = £1047.50 per month or £241.73 per week.
To be reduced to 19% by the end of parliament – 30 days before next general election on Thursday 2 May 2024 – i.e., Tuesday 26 March 2024
Chancellor Rishi Sunak has announced a fuel duty cut of 5p per litre – the “biggest cut to all fuel duty rates ever”. From 6pm tonight, and frozen until March 2023. Together with freeze, this is a tax cut worth around £5bn.
Business rates, will keep 100% small business rate relief but will also keep the temporary (post covid-19 measure) of a 50% discount retail, hospitality, leisure properties
Employment Allowance – April increases to £5,000 pa to encourage more recruitment. I.e., If total NIC liabilities are less than £5,000 then ER’s NIC is nil.
Chancellor will reform R&D tax credits to include data, cloud computing and mathematics.
Chancellor will also cut the tax rate on business investment – i.e., full offset against tax of all business investment to help businesses grow rather than for some capital item expenses where you cannot write off the whole expense on day 1, you write it off against depreciation over a few years as an asset depreciates.
The 5% VAT rate is currently only on some energy efficient items, but for the next 5 years solar panels, heat panels, insulation, wind power will be included and all at 0% VAT. This cannot happen yet for Northern Ireland, but the government will raise it with EU.
The Chancellor will help vulnerable households by doubling the Household Support Fund to £1bn. This will be paid to local authorities within the next two weeks to help vulnerable households with fuel poverty.
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