23.03.2022 | 4 minutes estimated reading time | Print this article

What was announced in the 2022 Spring Budget?

Today, the 23rd March 2022, has been one of the most anticipated dates of the calendar as Chancellor of the Exchequer, Rishi Sunak, has finally delivered the 2022 Spring budget. As energy bills rocket and prices hit record highs, experts have warned that we are about to face the worse cost of living crisis in decades.

While there’s a lot to take in, you’re probably wondering exactly what the budget means for you (and how it could affect any savings you have).

Rishi Sunak began his Budget by touching on the war in Ukraine, saying that Britain’s economic strength underpins freedom and liberty. The chancellor said he will respond to the conflict by building a stronger, more secure economy for the UK. “The actions we have taken to sanction Putin’s regime are not cost free for us at home. The invasion of Ukraine presents a risk to our recovery as it does to countries around the world,” he said.

The chancellor said forecasts from the Office for Budget Responsibility showed the economy would grow by 3.8% this year. The economy grew by 7.5% in 2021, after a fall of 9.4% in 2020 – the biggest decline for a century – during the first wave of the pandemic.

National Insurance

Sunak announced that 70% of workers will get an effective tax cut from the plan to lift the National Insurance threshold by £3,000 – it was previously due to go up by £300. It is the single biggest tax cut for a decade, he said – a tax cut for employees worth over £330 a year. This will take effect from July.

Fuel Duty

From 6pm tonight, fuel duty will be cut by 5p a litre. This cut will be in place until March next year and is worth more than £5bn. Motoring group, the RAC, says cutting fuel duty by 5p will take £3.30 off the cost of filling a typical 55-litre family car.

Taxes

Sunak said that he will cut the basic rate of income tax from 20% to 19% in 2024, meaning a 5bn tax cut for 30 million people. Sunak says this is fully costed and fully paid for in the plans announced today. He said it would not be responsible to make such a tax cut right now, given the uncertainty in the economy. “Tax cuts must be paid for, they must be prioritised and they must fit the economic circumstances of the time,” he said. The chancellor said it would be the first cut in income tax for 16 years.

Energy

VAT is due to be scrapped on energy saving materials: homeowners installing heat pumps, insulation and solar panels will no longer pay 5% VAT, but instead 0% VAT.

Business Investment

Sunak said the generosity of reliefs for business investment would be increased in order to boost UK productivity. He announced changes to research and development tax credits, saying the government would cut tax rates on business investment at the autumn budget. The chancellor also said he would increase the employment allowance for small businesses to £5,000 – a tax cut worth up to £1,000 for half a million small firms. This will begin in two weeks’ time.

Cost of living

Sunak said that inflation would average 7.4% this year, and that he would double the government’s household support fund to £1bn. The Office for Budget Responsibility revealed that the rise in inflation to a predicted 40-year high this year would trigger “the biggest fall in living standards in any single financial year since ONS records began in 1956-7.

Register for a Raisin UK Account

However the budget announcement directly affects you, it’s probably got you thinking about your savings and how to protect them.

In times of financial uncertainty, one option to consider is locking your money into a savings account that offers a fixed rate of interest, so you won’t be impacted by fluctuating rates and your savings will continue to grow.

Compare savings accounts

At Raisin UK, online banking is made easy thanks to a user-friendly dashboard that allows you to view all of your accounts with partner banks. If you want to quickly and easily apply for savings accounts with attractive rates from a range of UK partner banks, register for a Raisin UK account and log in to apply today. Don’t forget that it’s free to open an account.