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The Spring Statement is usually intended only to be an economic update, but with inflation hitting a 30-year high of 6.2% in February, the Chancellor has been under pressure to deliver something akin to a mini-Budget.

Here are the highlights………..

Income tax

Sunak announced “for the first time in 16 years” a 1% cut in income tax before the end of the Parliament in 2024. Sunak said this would be a £5bn tax cut. 

In the shock rabbit-out-of-the hat announcement at the end of his speech, Sunak announced “for the first time in 16 years” a 1% cut in income tax before the end of the Parliament in 2024. Sunak said this would be a £5bn tax cut. 

National Insurance

Sunak confirmed that the planned 1.25% increase in national insurance will go ahead next month to raise cash for health and social care. 

However, the Chancellor tried taking the sting out of this roll of the new health and social care levy by increasing the NIC threshold by £3,000 instead of the planned £300. He said this would equalise the NIC and income tax thresholds in one go from July. 

This takes the new NI threshold to £12,570. This is apparently the best way to help low and middle income workers.


Minimum wage

We will see an increase in the minimum wage from next month.

For those over the age of 23, the rise to £9.50 an hour will see an increase of over £1,000 a year for a full-time worker.

Those aged between 21-22 will rise to £9.18 per hour

Those aged between 18-20 will rise to £6.83 per hour

Those aged between 16-17 will rise to £4.81 per hour

VAT on energy saving materials

Sunak has scrapped the 5% VAT rate on energy saving insulation and solar panels.

He announced that for the next five years, homeowners having materials like solar panels, heat pumps or insulation installed will no longer pay 5% VAT – they will pay zero. 

He also confirmed that the government will reverse the EU’s decision to take wind and water turbines out of scope and zero rate them. “And we will abolish all the red tape imposed on us by the EU,” he said.


Fuel duty

As costs continue to spiral at the pumps, Sunak’s decision to slash fuel duty had been strongly expected. 

The 5p per litre is now in effect and is worth £5bn. However, Richard Murphy pointed out on Twitter, “Fuel duty being cut by 5p per litre, which is less than the increase in VAT now being paid on each litre of fuel bought. In other words, this is costing him nothing.” 

Fuel duty was previously frozen for 12 months at the Autumn Budget in October last year. 

R&D tax relief

Sunak stated that an overhaul on R&D tax relief is needed as it is clearly not working as well as it should for small and medium-sized companies. 

“Right now we know that the amount businesses spend on R&D as a percentage of GDP is less than half the OECD average. And that is despite us spending more on tax reliefs than almost every other country. Something is not working,” he said.

So Sunak confirmed that the government will reform R&D tax credits so that “they’re effective and better value for money. [This] will expand the generosity of the release to include data cloud computing and pure maths. And we’ll consider in the autumn whether to make the R&D expenditure credit more generous.”

Super Deduction Allowance

Prompted by the end of the super deduction scheme in March 2023 the Chancellor had also faced calls from business for more investment and even an extension to the tax break. Sunak alluded to this and we can expect more of this in the Autumn Budget.



March 2022

Cutting fuel duty on petrol and diesel by 5p per litre

April 2022

Cutting taxes on small businesses by up to £1,000 – by raising the Employment Allowance to £5,000

Minimum wage rise

VAT cut to energy saving materials

July 2022

Aligning the annual National Insurance Primary Threshold and Lower Profits Limit with the income tax personal allowance, making the first £12,570 of earnings tax free

April 2023

Cutting taxes on business investment – by reforming Capital Allowances and R&D tax reliefs

April 2024

Cutting the basic rate of income tax from 20% to 19%