On Wednesday 23 March 2022, Chancellor Rishi Sunak delivered his Spring Statement. Here is our summary of the main points.
Growth
The Chancellor explains that Office for Budget Responsibility forecasts show the economy will grow by 3.8% in 2022. GDP is likely to grow by 1.8% in 2023, 2.1% in 2024, 1.8% in 2025, and 1.7% in 2026. The economy grew by 7.5% in 2021.
Living costs
OBR forecasts inflation will average 7.4% this year. Fuel duty will be reduced by 5p per litre for 12 months. This takes effect from 6pm on Wednesday 23 March 2022. The Chancellor has announced a rise in the Government’s household support fund to £1 billion. Households that install solar panels, heat pumps, or insulation to zero will gain a 5% VAT reduction.
National Insurance
The planned 1.25 percentage rise in NI contributions will remain as a ‘dedicated funding service’ for health and social care. The threshold will increase by £3,000 this year, up from £300.
Business investment
The Government will cut taxes on business investment in the Autumn Budget. Reforms are in place for research and development tax credits and there will be an increase in the employment allowance for small businesses to £5,000, starting in two weeks’ time.
Income tax
The basic rate of income tax will be cut from 20% to 19% in 2024. This marks the first cut in income tax for 16 years.
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