Rishi Sunak gave his Spring Statement on 23 March 2022. It felt like there was a fair amount of sleight of hand aimed at repositioning the Chancellor as a champion of traditional Conservative tax-cuts, following a period of significant tax increases responding to the COVID-19 pandemic.

As a result, there was a tax giveaway from 6 July 2022 said to be worth £6.25bn by raising the employee national insurance contributions (NICs) thresholds to align them with the income tax personal allowance at £12,570, benefitting workers. Arguably however this measure does little more than cancel out around half the planned NICs rise in the last Budget – albeit redistributing the burden, benefitting lower earners. This increased both employees' and employers' NICs by 1.25% from 6 April 2022 under the banner of a health and social care levy. Remember that under those changes the dividend rate of income tax will also go up from 6 April 2022 by 1.25% (to 39.35%), as announced in September 2021, hurting investors.

This was combined with some VAT breaks for environmental/energy saving investment by households, and a promise to cut income tax in 2024 by dropping the basic rate of income tax to 19% - a tax cut for pretty much everyone, but not for a while. This seems like a clear indication that the government is planning on a general election in 2024, notwithstanding plans to get rid of the Fixed Term Parliaments Act.

There was of course also the immediate fuel duty cut by 5p/litre, which will get a lot of attention in the context of the significant inflation already being experienced.


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