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Rishi Sunak has announced his plans on how to help families who are struggling with soaring living costs as part of this Spring’s 2022 Statement.

The energy price cap, Russia’s invasion of Ukraine and the pandemic have had a huge impact on the economy. When combined with the cost of energy, food and fuel on the rise, just what has the Chancellor announced?

We’ve put together a summary of the 2022 Spring Statement headlines and what these might mean to you.

Key Spring 2022 Statement headlines

  • The basic rate of income tax will be cut from 20% to 19% by the end of 2024
  • Fuel duty will be cut by 5p a litre until March 2023
  • The National Insurance (NI) threshold will be raised by £3,000, meaning people must earn £12,570 per year before paying income tax or NI
  • VAT will be scrapped on home energy-saving measures, such as insulation, solar panels and heat pumps
  • The Household Support Fund for local councils is set to double to help the most vulnerable and low-income households

How will the reduction in income tax affect me?

The government is cutting the basic rate of income tax from 20p to 19p from 2024. This will reduce tax for more than 30 million workers, pensioners and savers – and make the average taxpayer £175 a year better off.

What does the cut in fuel duty mean?

The cut to fuel duty means the price per litre at the pumps will reduce from 5p from the day of the announcement (23 March).

Why has National Insurance risen?

The increase to National Insurance was announced last year to cover the cost of social care. This rise of 1.25% will be introduced in April – so the amount extra you pay will depend on how much you earn.

However, the minimum amount you need to earn to pay National Insurance is rising in July from £9,500 to £12,500 a year. According to Sunak, this is a tax cut for 30 million people worth over £330 a year.

How can I benefit from zero VAT insulation?

For the next five years, homeowners having energy efficiency measures installed, such as solar panels, heat pumps and insulation, will pay zero VAT – rather than 5%. For a typical family having solar panels fitted, this will see them make over £1,000 tax savings and over £300 a year reduction on energy bills.

Was Universal Credit mentioned in the 2022 Statement?

No, Universal Credit was not mentioned within the Statement announcement, despite the call for a boost to benefits to support households struggling to make increasing bills for living costs.

What is the Household Support Fund and how do I get this?

A £500m pot of money was provided to local councils last year. A further £500m has been allocated again, which will be available after 31 March when the current funding ends.

If you’re struggling with your bills, you can apply to your local authority for some of this cash. Whether you’re eligible and how much you’re entitled to will depend on where you live.

You can check how to apply for the Household Support Fund, by searching for your local council using the council finder tool.

Is the price of alcohol going up?

The price of alcohol wasn’t mentioned in the Statement speech – however, published documents show there will be no tax increase on the cost of alcohol – meaning you won’t have to pay more for a pint of beer or glass of wine.

Is the cost of cigarettes going up?

The cost of cigarettes is not going up. Like alcohol, this wasn’t mentioned in the speech, but was referred to in the Treasury’s documents.

Where can I go for debt advice?

PayPlan is here to support you if you’re struggling to make your payments and need some advice on what to do next. Our friendly team is here to offer free debt advice and will work with you to make sure you’re provided with the most suitable solution based on your circumstances.

Contact us now!

Our Financial Wellbeing Hub is also packed full of tips, guides and advice on how to budget better and make the most out of your income.