The Spring Statement 2022 takes place following the unprovoked, premeditated attack Vladimir Putin launched on Ukraine. The invasion has created significant uncertainty in the global economy, particularly in energy markets. The sanctions and strong response by the UK and its allies are vital in supporting the Ukrainian people, but these decisions will inevitably have an adverse effect on the UK economy and other economies too. The Statement represents vital changes needed to adjust to this new status quo, whilst also protecting families and households.
The following new measures have been included:
Fuel Duty
- Fuel duty will be cut by 5 pence per litre
- This cut will be in place for one year, until March next year.
- This will take effect from 6pm on 23rd March 2022.
VAT relief on energy saving measures
- For the next 5 years, the 5 per cent VAT rate on energy saving products will be cut to 0 per cent.
- Wind and water turbines will be brought in scope
- The application of this relief in Northern Ireland will be raised with the European Union, and The Northern Ireland Executive will receive a Barnett share of the value of this relief until it can be introduced UK-wide.
Household Support Fund
- Targeted support will be increased through the Household Support Fund (HSF)
- The HSF will be doubled to a £1 billion, with £500 million of new funding available to local authorities from April
- The £500 million extra funding for the Household Support Fund is UK-wide, with Scotland receiving £41 million, Wales £25 million and Northern Ireland £14 million in Barnett consequentials
National Insurance Contributions
- The National Insurance personal threshold will rise from £9,500 to £12,570 from July
- By raising the National Insurance personal threshold to £12,570, it will be brought in line with the equivalent Income Tax personal allowance.
Employment Allowance
- From April the employment allowance will increase to £5000
Income Tax
- The Chancellor stated that he intends to cut the basic rate of income tax to 19 pence in 2024.
- Cutting the basic rate of Income Tax by 1p in 2024 will apply in England, Wales and Northern Ireland. It is a devolved responsibility in Scotland so the Scottish Government will receive additional funding each year (approximately £350 million in 2024-25) through the agreed income tax Block Grant Adjustment, which they can use to deliver their own Income Tax cut.
