Cuts to fuel, tax and VAT: Spring statement key points at a glance

23 March 2022, 13:48 | Updated: 23 March 2022, 14:16

What Chancellor Rishi Sunak announced in the Spring statement
What Chancellor Rishi Sunak announced in the Spring statement. Picture: Alamy

By Megan Hinton

Rishi Sunak has unveiled his plan to tackle the cost of living crisis in his Spring Statement to MPs today.

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Chancellor Rishi Sunak admitted the financial outlook for the UK is "challenging" due to soaring inflation and the Russian invasion of Ukraine but added: "Today's statement builds a stronger, more secure economy for the United Kingdom."

Here are the key announcements the Chancellor made this afternoon:

Basic rate of tax cut

The basic rate of income tax will be cut from 20p to 19p in the pound.

A move the Chancellor branded as: "A tax cut for workers, for pensioners, for savers. A £5bn tax cut for over 30 million people."

National Insurance threshold increased by £3,000

From this July, people will be able to earn £12,570 without paying income tax and National Insurance.

The chancellor says this will amount to a tax cut for employees "worth over £330 a year".

Read more: Cost of living crisis: Inflation rises by 6.2% and its highest level in 30 years

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Cut to fuel prices

A 5p per litre cut in UK fuel duty has been announced by Chancellor Rishi Sunak.

The reduction will be implemented at 6pm on Wednesday and will last until March 2023.

The RAC estimate the cut will save consumers around £3.30 off the cost of filling a typical 55-litre family car.

VAT removed from energy saving materials

VAT will be reduced from 5% to zero on materials such as solar panels, heat pumps and insulation in a bid to help homeowners install more energy saving materials.

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Employment Allowance for small businesses to increase

The Employment Allowance will increase to £5,000 in two weeks time, which Rishi Sunak claims is a tax cut "worth up to £1,000 for half a million small businesses".

Extra money for Household Support Fund

There will be an extra £500m of funding through a doubling of the Household Support Fund to £1bn.

Critics say the new measures don't go far enough to tackle the cost of living crisis including inflation which is soaring to a 30-year high.

Shadow chancellor Rachel Reeves said the Government's plan did nothing for people on the edge of fuel poverty or for pensioners who are facing a "real-terms cut" to their income.

Rachel Reeves told the Commons: "At the weekend the Chancellor was asked about fuel poverty and he didn't even know the numbers.

"It is shameful that he doesn't, because when Martin Lewis predicts that 10 million people could be pushed into fuel poverty the Chancellor should sit up and listen."

She added: "We know that pensions and social security are not going to keep up with inflation. Pensioners and those on social security are being given a real-terms cut in their incomes.

"So, what analysis has the Chancellor done of the impact of benefits being up-rated by less than inflation? How many more children and pensioners will drift into poverty because of ... this Government?"