Published: 23 March 2022
I normally record a brief video commentary after all budget statements, but it has been a very busy day with clients, the make-up team have gone home for the day, and I really don’t want to put you off your Frosties in the morning.
I think it was a very political statement – more of that later when I refer to the planned cut in Income Tax before the end of the parliament.
In defence of the Chancellor, he has a difficult task. Much of what he needs to help the country with, is from non-controllable events – this time around, the despicable war in Ukraine. The shocks that this has caused in commodity costs, especially oil, and will cause in coming months and even years with crops and food: all on top of inflation that is largely outside the control of monetary policy.
The 5p per litre in duty of fuel is therefore an important step to help people who are struggling.
No mention of course of the changes due next month in respect of red diesel, which will affect many construction companies for example. With one I hand I gave with the other… you know the rest.
Moreover, with fuel duty at 35% and VAT at 17% of each litre of petrol, giving away 5p per litre is definitely affordable.
And it seems a similar give and take with NIC. There has been no movement on the planned NIC changes – the 1.25% increase for social care is still happening, but he has changed the threshold at which we start to pay – up from £9,600 to £12,570… to match the personal allowance for Income Tax.
An odd feature has been the change planned before then of parliament that I referred to at the start of this article – a planned reduction from 20% to 19%.
Frustrating in that it does absolutely nothing to help out those that are struggling to make ends meet now. But odd that, it enforced a dichotomy between those who have earned income and those that have income from investment. This is a tax saving for those that have retired and live off investments, but not so good for those that are employed.
Political again in, that green measures are addressed through changes to VAT (albeit only at the 5% level) on solar, heat pumps and insulation etc. “A saving of £1,000” per household he proudly announced – assuming that during a cost-of-living squeeze you have the other £19,000 free to spend so that you can save.
And a cost of living squeeze it most certainly is… the OBR said that disposable income - the money people have left after buying essentials - will take the biggest hit in a single year since records began in 1956,
As always if you would like to chat over what the changes mean for you, please get in touch and we will arrange to get together.