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Spring Statement 2022: What does it mean for you?

From government support to how much tax you pay, the Spring Statement can have an impact on you and your money.

What is the Spring Statement?

The Spring Statement is an annual statement made by the Chancellor of the Exchequer in the House of Commons. It includes a review of the nation’s finances and economic situation since the Autumn Budget, as well as changes proposed by the government.

New announcements

Here are some of the key announcements from the Spring Statement that may affect you:

Fuel duty cut

There is a 5p cut on fuel duty. The cut comes into force at 18:00 on 23 March for 12 months. This means motorists will temporarily save 5p per litre on petrol and diesel until March 2023. According to GOV.UK, a one-car family will now save £100, on average.

National Insurance threshold raised

From July 2022, the annual threshold for National Insurance contributions will rise from £9,880 to £12,570. This means that employees and self-employed workers won't pay any National Insurance on the first £12,570 of earnings per year from July 2022. 

The government has said this will save a typical employee over £330 a year. Around 70% of National Insurance payers will also pay less contributions – even with the National Insurance rate increase from April 2022, and the introduction of the Health and Social Care Levy from April 2023.

0% VAT on energy-saving materials

Homeowners will pay 0% VAT on energy saving materials for 5 years from April 2022. This is down from 5% and includes products such as solar panels and heat pumps, which will help families become more energy efficient. The government said a ‘typical family’ installing roof top solar panels would save £1,000 and then £300 a year on their energy bills.

How to make your home energy efficient

Household support fund doubled

From April 2022, the government’s household support fund will double to £1 billion. This money will help councils provide help and support for vulnerable households.

Support for small businesses

From April 2022, the Employment Allowance will increase to £5,000, which the government claimed to be a tax cut worth up to £1,000 for half a million small businesses.

Future cuts to the basic rate of income tax

By the end of this Parliament in 2024, the basic rate of income tax will be cut from 20p to 19p in the pound. The government said this is "a tax cut for workers, for pensioners, for savers. A £5 billion tax cut for over 30 million people".

Previous announcements

Minimum wage increase

The National Living Wage – the minimum pay for workers over the age of 23 – will increase, as planned, from £8.91 to £9.50 an hour from 1 April 2022. This 6.6% rise would amount to over £1,000 a year before tax for people working 35-hour weeks.  

Universal Credit 'taper rate'

Universal Credit is a benefit payment for workers on low incomes and those out of work. The taper rate reduces the amount you receive, as you earn more money.

The current rate of 55% remains, which means you keep an additional 8p for every £1 of net income you earn. This rate was reduced from 63% in November 2021.

Explore more: 

How to manage on a reduced income

Could you be missing out on unclaimed benefits?

National Insurance rise

1.25% will be added to the rate of National Insurance contributions from 6 April 2022 to 5 April 2023, as planned. This will be used to help fund the NHS, health and social care in the UK.

A separate Health and Social Care Levy of 1.25% will be introduced from April 2023.

The amount of National Insurance you’ll need to pay depends on your employment status and how much you earn.  

Visit GOV.UK to find out more.

Personal and corporation tax

The personal tax threshold – the amount you can earn before starting to pay tax – will remain at £12,570 until April 2026. The higher-rate threshold will remain at £50,270 until April 2026. 

The capital gains tax threshold will remain at £12,300 until 2026. You may have to pay capital gains when you sell an asset, such as a second home. It’s based on the profit you make – not the price you sell it for.

Dividend tax rates will rise by 1.25% in 2022-23.

Corporation tax will continue to increase from 19% to 25% in April 2023. However, the rate for companies with profits under £50,000 will stay at 19% and there will also be relief for businesses with profits under £250,000.

State Pension increase

State Pensions will increase by 3.1%, as planned, for 2022/2023. This means for those who reached State Pension age after April 2016, the full new State Pension will rise by up to £288.60 a year in the 2022/2023 tax year, compared to 2021/2022.

Alcohol and air travel

The alcohol duty system will continue to be overhauled, changing the way different drinks are taxed from 2023. Broadly speaking, stronger drinks will be taxed more. Duty rates on draught beer, cider and sparkling wine will fall, for example, while the rate on red wine will increase. 

Air Passenger Duty for flights between airports in England, Scotland, Wales and Northern Ireland will continue to be cut by 50% from April 2023. However, a new rate of £91 will be charged on long-haul flights of 5,500 miles or more.

Incentives to help tackle climate change

Incentives to help tackle climate change will continue as planned. 

The government announced in the Autumn Budget that it would invest £3.9 billion to decarbonise buildings, including ‘£1.8 billion to support tens of thousands of low-income households to make the transition to net zero while reducing their energy bills’. 

They also confirmed £450 million would go towards growing the heat pump market in England and Wales – with a target of installing 600,000 a year by 2028.

Explore more:

How to reduce your carbon footprint and save money

Recovery Loan Scheme

The Recovery Loan Scheme will continue to be extended until 30 June 2022. If eligible, businesses may be able to apply for finance of up to £2 million to help them recover from the impact of the pandemic. The government guarantee will be reduced from 80% to 70%. 

Support for retail, hospitality and leisure sectors

For the 2022/2023 tax year, eligible retail, hospitality and leisure properties will benefit from a 50% business rates discount – up to a maximum of £110,000, as planned. This includes shops, restaurants, gyms and hotels and would amount to a £7 billion reduction in business rates over the next 5 years. 

Visit GOV.UK to find coronavirus financial support for your business.  

Explore more: 

Coronavirus: 6 ways to manage your financial health

£20,000 ISA allowance remains

The total amount you can save in ISAs in the 2022/2023 tax year will stay at £20,000. This is your annual tax-free ISA allowance. 

You can spread it across different types of ISAs, such as:    

  • cash ISA

  • stocks & shares ISA

  • innovative finance ISA

But you can only pay into one ISA of each type and you must stay within the total limit of £20,000 each tax year. If eligible, you can also put up to £4,000 into a Lifetime ISA, as part of this limit. The Junior ISA and Child Trust Fund allowances will remain at £9,000. 

Could you be missing out on unclaimed benefits?

Many people are eligible for government support but don’t realise it. You may think you need to be out of work to claim anything – but that’s not the case. 

Check what government support you’re entitled to