Rishi Sunak
2 min read
Rishi Sunak has announced that he is raising the threshold at which people are starting to pay national insurance in an effort to help households cope with the worsening cost of living crisis.
The Chancellor has faced calls, including from many Conservative MPs, to post the planned 1.25% increase in National Insurance contributions. He was warned that many families are struggling to afford the increase, linked to high energy bills and inflation at 30 years high.
Sunak resisted the call, however, in his spring statement on Wednesday saying he would instead increase the threshold at which people pay taxes from £ 9,500 to £ 12,570 – an increase of just over £ 3,000.
He told deputies that the change would happen “once and for all”, not in a few years’ time, and that there would be a tax cut of £ 6 billion for 30 million people across the UK.
“A tax cut for employees worth over £ 330 a year. The biggest increase in a base tax threshold – ever. And the biggest single personal tax cut in a decade,” the chancellor said.
Sunak also announced that he would reduce fuel consumption by 5p per liter for a year until March 2023.
The government was under pressure to ease the financial burden on motorists, with rising oil prices making it more expensive for people to fill their cars.
The Chancellor has revealed that before the next election, which takes place in 2024, he will reduce his income tax by 1p per pound, from 20p to 19p.
He also announced that VAT will be reduced from 5% to zero on materials such as solar panels, heat pumps and insulation in an offer to help homeowners install more energy-saving materials.
Sunak said he was delivering on his promise to reduce taxes in a “responsible and sustainable way”.
However, Shadow Chancellor Rachel Reeves said the plan did not go far enough to protect households from rising energy bills and called on Sunak to impose a windfall tax on the profits of oil and gas companies. .
“Inflation has been at its highest level for 30 years – and rising. Energy prices are at record highs. People are worried sick,” she said.
“For all his words, it is clear that the Chancellor does not get the scale of the challenge.”
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