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Sat, 13 April 2024

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Rishi Sunak Raises National Insurance Threshold By Over £3,000

Rishi Sunak

2 min read

Rishi Sunak has announced that he is raising the threshold at which people start paying National Insurance in an effort to help households cope amid the worsening cost of living crisis.

The Chancellor had faced calls, including from many Conservative MPs, to postpone the planned 1.25% rise to National Insurance contributions. He had been warned that many families would struggle to afford the increase amid soaring energy bills and inflation hitting a 30-year high.

Sunak resisted those calls, however, saying in his Spring Statement on Wednesday that he would instead raise the threshold at which people pay the tax from £9,500 to £12,570 — a raise of just over £3,000.

He told MPs the change would happen in "one go", not over the course of several years, and that it would amount to a £6bn tax cut for 30m people across the UK.

"A tax cut for employees worth over £330 a year. The largest increase in a basic rate threshold – ever. And the largest single personal tax cut in a decade," the Chancellor said.

Sunak also announced that he would cut fuel duty by 5p per litre for a year until March 2023. 

The government had been under pressure to ease the financial burdern facing motorists, with soaring oil prices making it more expensive for people to fill up their cars.

The Chancellor revealed that before the next election, which is scheduled to take place in 2024, that he would cut income tax by 1p in every pound, from 20p to 19p. 

He also announced 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.

Sunak said he was delivering on his promise to cut taxes in a "responsible and sustainable way".

However, Shadow Chancellor Rachel Reeves said the plan didn't go far enough to protect households from rising energy bills and called on Sunak to impose a windfall tax on the profits made by oil and gas companies.

"Inflation at its highest level for 30 years – and rising. Energy prices at record highs. People are worried sick," she said.    
 
"For all his words, it is clear the Chancellor doesn’t get the scale of the challenge".

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