The situation in Ukraine reminds us that the United Kingdom’s security and ability to be a force for good in the world is in large part based on the strength of our economy. Thanks to the actions of this government, the economy is recovering well, with record job vacancies and unemployment back at pre-crisis levels.
But the steps we are taking to sanction Russia are not cost free for us at home: the biggest impact will be on the cost of living for working families.
This Government is standing by you, as it has done over the past two years. It is protecting families from the rise in living costs and supporting the growth of small businesses.
The new Tax Plan will reduce and reform taxes- including cutting fuel duty, cutting the basic rate of income tax, and cutting National Insurance for 30 million working people- meaning people can keep more of what they earn.
Under the new tax plan:
- Fuel duty is being cut by 5p for the next 12 months, delivering a £5 billion tax cut for drivers. This, alongside the fuel duty freeze, will save drivers £100, van drivers £200 and HGV drivers £1,500 this year.
- The National Insurance Personal Threshold is rising to £12,570 from July, up from £9,500. This represents a £6 billion tax cut for nearly 30 million workers, an average of £330 a year- the biggest single personal tax cut in a decade.
- The Basic Rate of Income Tax will be cut to 19% before the end of parliament, only the second income tax cut in two decades. This cut will be worth around £175 for the average taxpayer.
- The employment allowance is going up to £5,000, delivering a £1,000 tax cut for half a million small businesses.
- The Household Support Fund is doubling to £1 billion, delivering an additional £500 million to the local authorities to support the most vulnerable families with the cost of living.
- VAT is being removed from energy saving materials like solar panels, heat pumps or insulation. This represents a £250 million tax cut for homeowners. We are able to remove the EU-imposed 5% VAT charge due to our withdrawal from the EU.
I know some of my constituents have been calling for the NICS levy to be cancelled. This Levy serves as a dedicated funding source for the country’s top priority- the NHS and social care. In the short-term, it will tackle the unprecedented backlog the NHS is facing, and in the long term will provide sustainable funding over the long-term as demand grows. Unlike other taxes, every penny legally will go direct to health and social care. And through our plans to reform healthcare, we will help ensure every pound of taxpayers’ money is well spent.
A long-term funding solution for the NHS and social care is not incompatible with reducing taxes on working families. Because of today’s increase to the National Insurance personal tax threshold, around 70 per cent of all workers will have their taxes cut by more than what they will pay through the levy.