In a series of high-profile announcements presented in his spring announcement, Mr. Sunak confirmed that the fuel tax cut would be extended until next March.
And he confirmed that the National Insurance (NI) threshold would increase by £3,000 from July as he said he was publishing a new ‘tax plan’ that would ‘help families with a living wage’ would ‘create conditions for higher growth’ and “fairly share the gains from growth.”
The announcement comes after criticism of a planned 1.25 percentage point increase in NI for workers to raise more funds for the NHS and Social Security.
The chancellor also announced that homeowners who have upgraded homes installed, such as solar panels or thermal insulation, will not have to pay VAT on materials for the next five years, and the Household Support Fund has been doubled to £1bn.
Spring Statement 2022: UK Spring Statement Live Updates from Rishi Sunak
Mr Sunak said he would cut the base income tax rate from 20p a pound to 19p before the closing of the current parliament in 2024, which would benefit English taxpayers.
Starting the spring announcement, Mr. Sunak said: “This is the largest reduction in all fuel duty rates ever.
“While some are calling for the cut to last until August, I have decided that it will last until March next year…together with this year’s freeze, this is a tax cut for hard-working families and businesses worth more than £5bn. , and it will take effect today from 18:00.
Motorists have been hit by record prices for pumps as Russia’s invasion of Ukraine pushed up the cost of oil amid supply concerns.
Mr Sunak said underlying debt is expected to decline steadily from 83.5% of GDP in 2022/23 to 79.8% in 2026/27.
He added that borrowing as a percentage of GDP is 5.4% this year, 3.9% next year, then 1.9%, 1.3%, 1.2% and 1.1% in subsequent years.
Mr. Sunak told MPs: “OBR [Office for Budget Responsibility] did not take into account the full consequences of the war in Ukraine, and we must be prepared for the deterioration of the economy and public finances, and potentially significant. And the cost of credit continues to rise.
“We are forecast to spend £83bn on interest on debt in the next fiscal year, the highest we have ever seen. And almost four times the amount we spent last year.”
Mr. Sunak said that is why he will continue to “thoroughly weigh” calls for more government spending.
The Chancellor told MPs that he would publish a “tax plan” in which he would like to cut and reform taxes compared to Parliament, and insisted that health care and nursing levies remain in place.
But he said: “Our current plan is to increase the NIC threshold this year by £300, I’m not going to do that – I’m going to increase it by the full £3,000, fulfilling our promise to completely equalize the NIC. income tax thresholds.
“And not incrementally over many years, but at one time, this year. From July this year, people will be able to earn £12,570 a year without paying a single penny of income tax or national insurance.
“This is a £6bn tax cut for 30m people across the UK. Tax cuts for employees worth more than £330 per annum. The largest increase in the base rate threshold in history. And the biggest one-time personal tax cut in a decade.”