Chancellor Rishi Sunak delivered his Spring Statement today (March 23) and within it he outlined measures to help people with the cost of living amid the backdrop of soaring energy, fuel and household bill costs. However, does the plan provide enough support for beauty businesses?
Sunak began by warning that Russia’s invasion of Ukraine presents a risk to the UK’s economic recovery after the coronavirus pandemic. He also stated that in the next financial year the UK is forecasted to spend £83 billion on debt interest, which is why the Government has had to take “difficult decisions with the public finances”.
The Office for National Statistics (ONS) revealed that rising prices for energy, goods and food had helped inflation to increase 6.2% in the 12 months to February 2022. The Office for Budget Responsibility has also forecasted that inflation will average 7.4% this year.
“Today’s statement builds a stronger more united economy for the United Kingdom,” Sunak said, but does it do enough? This is what I have outlined…
Key highlights from Chancellor Rishi Sunak’s Spring Statement and how it will impact beauty businesses:
employment allowance – From April 2022, the Employment Allowance will increase to £5,000 and this will start in two weeks’ time. Sunak claims it is a tax cut worth up to £1,000 for half a million small businesses.
National Insurance Threshold – Sunak said the Government will raise the threshold people earn before they pay National Insurance (NI). From July 2022, people can earn £12,570 per year without paying a single penny of income tax or NI. “That’s a £6bn personal tax cut for 30 million people across the United Kingdom,” he said.
He added that this would be a tax cut for employees worth more than £330, stating, “[this is] the largest increase in a basic rate threshold ever, and the largest single person tax cut in a decade”.
Plans to help motorists – Sunak has announced a 5p cut to fuel duty – “the biggest cut to all fuel duty rates ever,” he said. The cut will be in place for 12 months, until March 2023, and takes effect from 6pm tonight (March 23). “It’s a tax cut for families worth more than £5bn pounds,” he added. Motoring group RAC has said this measure will take £3.30 off the cost of filling a typical 55-litre family car.
energy-saving – The Government is scrapping the VAT if home owners want to install energy insulating materials. For the next five years, homeowners having materials like solar panels or heat pumps installed will pay 0% VAT (it used to be 5%). Sunak said he can make the move as a result of Brexit – “We will abolish all the red tape imposed on us by the EU.”
Household Support Fund – The Government is doubling the Household Support Fund to £1bn pounds to support vulnerable households. Local authorities will be best placed to help those in need and they will receive the funding from April.
Income tax – Sunak told the Commons that the OBR expects inflation to be back under control by 2024, debt to continue to fall, and the economy to continue to grow. He said that before the end of this parliament in 2024, the basic rate of income tax will be cut from 20p to 19p in the pound. “A £5bn tax cut for more than 30 million people. It’s fully costed and paid for in the plan announced today,” he said.
Other important notes:
- The incoming levy to pay for NHS and social care spending is “necessary”, as the funding is “needed now,” he said. So, the levy will stay despite rising inflation rates.
- The issue of employment training in the private sector will be reviewed as part of the Government’s new tax plan. I have claimed this will include an assessment of whether the Apprenticeship Levy – a tax on the wage bills of companies introduced in 2017 to pay for skills training – is “doing enough”.
What do you make of the Spring Statement? Tell us your thoughts below.