The Spring Statement: A Summary from Hoxton
Yesterday, on the 23rd of March, the Chancellor announced his spring statement amid a backdrop of massive government debt, rising inflation and a massive cost of living crisis unfolding in the UK, added to the pressures added by the situation in Ukraine.
Whilst there is nothing of particular interest to the high-net-worth sector, it will benefit from the two headline announcements: the cut in fuel duty by 5p per litre and the raising of the national insurance threshold to £12,570. Everyone will be able to earn £12,570 before they pay and tax or national insurance. Mr Sunak says it is a “£6billion tax cut for 30 million people”.
This will affect those who operate through a limited company and take a salary of £832 per month and the balance as dividends. The £832 is set so that while you will qualify for pension credits and other associated benefits your national insurance obtains you don’t have to pay any NI, as you are below the lower-earning limit. The addition of NI on dividends from 5th April makes this system slightly less effective but still worthwhile.
Other measures announced include:
- VAT on household green energy equipment like solar panels and heat pumps is scrapped
- Household Support Fund, a grant for councils to give to most vulnerable households, doubled to £1billion
- Pledge to bring in ‘fully costed’ cut to income tax from 20p to 19p before the next election in 2024.
The Office for Budget Responsibility (OBR) has lowered the growth forecast to 3.8 per cent this year, falling to 1.8 per cent in 2023 and then 2.1 per cent, 1.8 per cent and 1.7 per cent in 2024-6 with inflation expected to average 7.4 per cent this year.
Mr. Sunak said, ‘People should know we will stand by them as we have in the past two years’.
Debt interest payments hit £83billion this year due to inflation.
To further discuss any aspects of the Spring Statement that you feel could impact you, or indeed any other current concerns or objectives you have concerning your financial planning arrangements, reach out today to speak with one of our tax or investment specialists.
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