The annual Spring Statement is usually a pretty low-profile affair. But with the huge price-hikes currently affecting everything from energy bills to the weekly food shop, its no surprise that Chancellor Rishi Sunak felt the need to make some bigger policy announcements this year.
With tax changes and a few other types of financial support being made available, this statement has been used to throw out a life raft to those families who are currently struggling. And while the changes won’t make everybody better off, it’s hoped that they will do some good for those on lower incomes. Here are our top three takeaways from this year’s statement, and how they will affect an average household.
National insurance contributions go down for most earners
The rate of national insurance contributions is actually going up from 12% to 13.25%, however most people are going to end up paying less. That’s because the threshold – the amount that you can earn before national insurance contributions kick in – is also going up. From July, the threshold will be £12,570. This means that you’ll be paying national insurance contributions on a smaller portion of your salary.
If you earn less than £41,389 (as 70% of us do), this will mean that you’re paying less national insurance overall. The amount you save depends on your salary, but as an indication, somebody earning £25,000 will be saving around £200. Those on a higher income will end up paying slightly more.
We’ve seen some concern online that this will affect pension eligibility, but that’s a myth. The minimum income needed to earn national insurance credits for your pension will stay at around £6,000 per year.
It will be easier to make your home energy efficient
One option for countering rising energy bills is to make your home more efficient, with products such as solar panels, heat pumps and insulation. The government wants there to be an incentive for homeowners to do this, so he has cut the VAT from 5% all the way down to zero. This complements existing schemes such as the Green Home Grant, which makes installing pricy insulation materials a lot more achievable.
Fuel prices won’t be quite so expensive
There’s no getting around the fact that fuel is going to be pretty pricy for the foreseeable future. While motorists are unlikely to be eyeing the petrol station gleefully any time soon, Rishi Sunak’s decision to cut fuel duty by 5p per litre will be a welcome one. According to the treasury, it will reflect a saving of roughly £100 a year for the average car driver, and £200 for the average van driver. This is only a temporary measure, set to last for the next 12 months, with the hope that the current cost of living crisis will have eased by this time next year.
These measures should help to ease some of the strain, but the next few months are still going to be expensive for many people. Now is a good time to check your eligibility for benefits, make sure that you’re using the cheapest suppliers for things like internet and mobile phone services, and run over your budget ahead of incoming price increases.
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