Spring Budget 2022 – What Does It Mean For Me?
Rishi Sunak, the UK’s Chancellor today shared the government’s Spring 2022 Budget plans – let’s get into the plans and work out what it means for us.
It’s worth noting that Rishi opened his budget speech with specific references to the war in Ukraine, reminding us that the financial sanctions to Putin’s regime “are not cost-free for us at home”. Whilst this is likely accurate, we must remember that rising inflation and energy prices were already contributing to the cost of living crisis prior to the conflict beginning.
Five of the leading budget initiatives for individuals were:
Fuel duty to be cut by 5p a litre for 12 months
Whilst this is a welcome cut, the reality is that for many people, fuel is growing at such a rate that it would be hard for the benefit to be truly felt. It currently costs £91.87 to fill a 55-litre tank. A 5p cut in the fuel duty is likely to lead to a £3.30 saving per tank.
0% VAT for green initiatives
There will be a reduction from 5% to zero on the VAT rate for households that install solar panels, heat pumps or insulations – a nod to the net zero commitments it intends to make by 2050.
Household support fund doubled
The household support fund will be doubled from £500m to £1bn, enabling local authorities to do more to help those households that need it the most.
National Insurance hike stands – but threshold is raised
Rishi confirmed that the 1.25% increase in national insurance contributions is to remain, however he did announce that he would increase the threshold by £3,000 this year, meaning you won’t pay national insurance contributions until you earn over £12,750. This is in line with the personal income tax allowance.
Basic rate tax cut from 20% to 19% . . . but not yet
The basic rate of income tax will be cut from 20p to 19p in the pound – but before you go piling up the extra pounds saved, it’s not coming in until 2024.
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