Chancellor Rishi Sunak sprung somewhat of a surprise in the 2022 Spring Statement with the announcement that from July 2022 the starting threshold for national insurance will increase to £12,750.
The measure will help hardworking taxpayers to keep more of what they earn before they begin paying personal taxes, the government has said.
According to the government, the cut is worth over £6 billion and will benefit almost 30 million working people, with the average employee saving over £330 in the year from July.
Additionally, Rishi Sunak also announced that the basic rate of income tax will be cut by 1p in the pound in 2024. This represents the first cut to the basic rate of income tax in 16 years and is worth £5 billion for workers, pensioners, and savers.
Commenting on the Chancellor’s Spring Statement measures, Tom Waters, Senior Research Economist at the Institute for Fiscal Studies (IFS), said: ‘The Chancellor is . . . giving with one hand in tax, having previously taken away with the other. When all is said and done, the reforms imply a greater level of tax for almost all workers – especially those on higher earnings. In the nearer term, many households are likely to see real-terms declines in their incomes with both earnings and benefits failing to keep up with inflation.’