The highly anticipated statement came on a day when it was revealed inflation had hit a 30-year high. The Office for National Statistics revealed that rising prices for energy, goods and food had contributed to inflation to rising to 6.2%.
Sunak opened his statement on Wednesday afternoon by talking about the situation in Ukraine, he advised that the security of the UK’s economy has allowed for the ‘tough’ sanctions against Russia but did also say that the war poses a risk to the UK’s recovery. Sunak then said for the next five years, homeowners will pay 0% VAT on energy saving products, such as solar panels and heat pumps.
The Chancellor also announced that he will raise the threshold people earn before they pay National Insurance. He said: “From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance.
“That’s a £6bn personal tax cut for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year.”
Sunak made a pledge that the government will ‘reform’ the generosity of tax credits on the money private companies spend on R&D. He also added the government will cut tax rates on business investment, with further details being published at the Budget in the autumn.
The Chancellor made one more announcement for small businesses, he said the Employment Allowance will increase to £5,000, claiming it is a tax cut worth up to £1,000 for half a million small businesses. The new amount will come into place in two weeks’ time.
Tax Partner at robinson+co Brett Bennett, comments: “This was probably one of the shortest budgets that I have sat through in my 20 years of working in accountancy, but also one of the most anticipated and crucial ones.
“With the cost-of-living crisis continuing to unfold, it was going to be a budget where the Chancellor focused on saving tax and providing support to those households that are most impacted by this.
“He’s achieved this with the National Insurance threshold increase, useful for employees and the self-employed individuals, which will reduce the impact of the NHS levy that comes in to effect next month for those households. For only the second time in twenty years he has also offered additional support to households in the country with the 5p cut in fuel duty.
Brett added “We would encourage business owners to get in touch with us to understand further what specific support may be available to them and how to go about benefitting from Wednesday’s announcements.”