Spring Statement Highlights

UK GDP growth forecast cut

The growth forecast was revised down for the year with the Chancellor citing the conflict in Ukraine as the reason. The OBR - the independent forecasting agency of the government - particular uncertainty as a result of the conflict is given for the difficulty in forecasting the full impact of the conflict on the economy, revising down its economic forecast to 3.8%.

There is also no anticipation that the level of growth will bounce back in 2023, as growth is expected to be almost half the rate of this year, at 1.8%. As lower inflation would be expected to boost GDP growth, the implication of the Chancellor’s statement is that inflation will be high in 2023 as well. The expectation is for inflation to average 7.4% this year.

Basic rate of income tax to be cut to 19p by 2024

According to the OBR by 2024 inflation is expected to be back under control, with debt falling sustainably and the economy growing - with fiscal rules met and a projected margin of safety, the intention is to deliver on tax cuts promised in 2021.

National Insurance threshold raised by £3K

The National Insurance threshold has been lifted by £3,000 to bring it into line with income tax. The threshold at which employees and the self-employed start to pay national insurance contributions will rise from £9,880 to £12,570 a year and will be implemented from July 2022. The decision to raise the threshold is a first step in aligning income tax and NIC.

Fuel Duty cut by 5p

Fuel duty has been cut following record price highs since Russia’s invasion of Ukraine which led to an increase in the cost of oil due to supply fears. This comes into place with immediate effect and will last until March 2023.

Employment Allowance

The Employment Allowance, which gives relief to smaller businesses' National Insurance payments, will increase from £4,000 to £5,000 from April.

Energy efficient homes

Homeowners installing energy efficiency materials such as solar panels, heat pumps, or insulation will see VAT cut on these items from 5% to zero for five years.