MP Matt Warman has welcomed the Chancellor’s Spring Statement, which he says goes further to strengthen the UK’s economy and will mean “people can keep more of what they earn”.
Mr Warman said the situation in the Ukraine and the steps the United Kingdom are taking to sanction Russia are not cost free for people at home: the biggest impact will be for working families.
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“The situation in Ukraine reminds us that the United Kingdom’s security and ability to be a force of good in the world is in large part based on the strength of our economy,” he said.
MP for Boston and Skegness Matt Warman.
“That is why this Government is going further to strengthen our economy, publishing a new Tax Plan to reduce and reform taxes – including cutting fuel duty, cutting the basic rate of Income Tax and cutting National Insurance for 30 million working people – meaning people can keep more of what they earn.
“This Tax Plan delivers the biggest cut to personal taxes in over a quarter of a century – simplifying our system in the long-term whilst we deliver immediate relief for cost-of-living pressures.”
The IMF said the UK had the fastest growing economy in the G7 last year and today’s announcement from the Chancellor, Rishi Sunak, seeks to remain responsible on public spending and public finances to protect and increase this growth whilst helping families with the cost of living.
Measures set out by the Chancellor include reducing and reforming taxes by:
– Slashing fuel duty by 5p for twelve months, delivering a £5 billion tax cut for drivers.
Together with the fuel duty freeze, this will save car drivers £100, van drivers £200, and HGV drivers £1,500 this year, coming into effect immediately from 6pm this evening, across the United Kingdom.
– Raising the National Insurance personal threshold from £9,500 to £12,570 from July, delivering the largest increase in a starting personal tax threshold in British history. This is equivalent to a £6 billion tax cut for nearly 30 million workers and worth over £330 a year starting in July, across the entire United Kingdom. This is the largest single personal tax cut in a decade.
– Helping people keep more of what they earn by cutting the basic rate of income tax to 19 pence in 2024, delivering a tax cut worth £5 billion for over 30 million workers, pensioners and savers – only the second income tax cut in two decades and the first income tax cut for 16 years. This will be worth around £175 for a typical tax payer.
– Raising the employment allowance to £5,000, delivering a £1,000 tax cut for small businesses. The Employment Allowance cuts employers’ national insurance tax bills by increasing the employment allowance even further to £5,000 from April – that’s a new £1,000 tax cut for half a million small businesses.
– Doubling the existing Household Support Fund to £1 billion, delivering an additional £500 million to the Household Support Fund. This helps the most vulnerable families with the cost of living. The fund is distributed through local authorities in England, who have discretion over exactly how the funding is used. This is expected to benefit 3 to 4 million vulnerable households.
Chancellor of the Exchequer, Rishi Sunak said: “It is only because this Conservative Government is taking the tough but responsible decisions that we can announce taxes are being cut and debt is falling.
“Today’s new Tax Plan will help families with the cost of living, create the conditions for private sector-led growth, and share the proceeds of growth fairly.
“We are delivering the biggest net cut to personal taxes in over a quarter of a century, and that is only possible because of the disciplined approach to public spending that only a Conservative government can provide.”
SPRING STATEMENT EXPLAINED
• Fuel duty is being slashed by 5p for twelve months, delivering a £5 billion tax cut for drivers together with the freeze. Conservative governments have frozen fuel duty for twelve consecutive years.
But in recognition of the unexpected circumstances pushing up fuel prices, the Government are today cutting fuel duty by 5 pence for a full year – only the second cut in twenty years, the largest ever cut across all fuel duty rates, and a new tax cut itself worth £2.5 billion, adding up to over £5 billion together with the cost of the
freeze. Together with our freeze, this will save car drivers £100, van drivers £200, and HGV drivers £1,500 this year. Furthermore, 40 per cent of the cut will benefit businesses. And this will come into effect immediately from 6pm this evening, across the United Kingdom.
• The National Insurance personal threshold will rise from £9,500 to £12,570 from July, meaning people keep more of what they earn. The Conservative Government are raising this threshold for National Insurance to £12,570 from July – the largest increase in a starting personal tax threshold in British history, equivalent to a £6 billion tax cut for
nearly 30 million workers and worth over £330 a year starting in July, across the entire United Kingdom. This is the largest single personal tax cut in a decade.
• Most people will be better off even after paying the new Health and Social Care Levy. Around 70 per cent of all workers will have their taxes cut by more than what they will pay through the levy to sustainably fund the NHS and social care.
• Changes set out in the Spring Statement will deliver a manifesto commitment to cut tax on workers and simplify the tax system. By raising the National Insurance personal threshold to £12,570, it is in line with the equivalent Income Tax personal allowance. This simplification means that from July, people will be able to earn £12,570 a year without paying a single penny of income tax or national insurance. The independent Institute for Fiscal Studies said this is ‘the best way to help low and middle earners through the tax system’.
• VAT on energy saving materials will be scrapped, providing a £250 million tax cut for homeowners. The current VAT relief for families installing energy saving materials like solar panels, heat pumps or insulation used to be more generous. Using the UK’s Brexit freedoms, the Government are removing this 5 per cent VAT charge over the next five years, reverse the EU’s decision to take wind and water turbines out of scope, and remove all the complex EU-imposed red tape. This adds up to a £250 million tax cut for energy efficiency. A typical family installing roof top solar panels will save £1,000 on installation, and then £300 annually on their energy bills.
• The existing Household Support Fund will be doubled to £1 billion, helping the most vulnerable households. The Government are adding an additional £500 million to the Household Support Fund, which helps the most vulnerable families with the cost of living. The fund is distributed through local authorities in England, who have discretion over exactly how the funding is used. It is expected to benefit 3 to 4 million vulnerable households.