Rishi Sunak confirms 5p cut in fuel duty as part of spring statement

Rishi Sunak has delivered his spring statement, which included a 5p cut in fuel duty, a raise in the national insurance threshold and a doubled household support fund.

Addressing MPs at today’s PMQs, the Chancellor began by talking about the UK’s support of Ukraine and it’s many sanctions of Russian businesses and individuals, actions he warned are not ‘cost-free’ and present a ‘risk to our recovery’.

From there, he announced the numerous measures that will be taken by the government to help the British public with the looming cost of living crisis.

Here’s everything you need to know about the spring statement delivery:

Fuel Duty cut by 5p

Opening his spring statement with the topic of rising petrol and diesel costs, Sunak began by announcing that from 6pm tonight, there will be a 5p cut to fuel duty, which he called ‘the biggest cut to all fuel duty rates ever’. 

This discount will remain in place until March next year.

0% VAT on energy saving materials

It was announced that homeowners will pay 0% VAT on energy saving materials, such as solar panels, heat pumps and insulation. Sunak pointed out that installing solar panels will save £1,000 worth of taxes a year and more than £300 in annual energy bills.

Crediting the move to Brexit, he said: “We’ll also reverse the EU’s decision to take wind and water turbines out of scope – and zero rate them as well.”

Household support fund doubled 

Also as part of the spring statement delivery was the doubling in household support fund, which will be distributed to vulnerable households by local councils.

These councils will receive £5bn of new funding from April. 

National Insurance threshold increased

The chancellor announced that the government will be raising the threshold for the amount people earn before they pay National Insurance.

He said: “From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance.

“That’s a £6bn personal tax cut for 30 million people across the United Kingdom… A tax cut for employees worth over £330 a year.”

He added that this is the largest increase in a basic rate threshold ever, and the largest single personal tax cut in a decade.

Employment allowance increased

The chancellor also announced an increase in employment allowance to £5,000 for small businesses.

He explained: “From April, the Employment Allowance will increase to £5,000. That’s a new tax cut worth up to £1,000 for half a million small businesses – starting in just two weeks’ time.”

Basic rate of income tax to be cut

The basic rate of income tax will be cut from 20p to 19p in the pound. This will come in before the end of this parliamentary term in 2024.

Sunak said: “£5bn tax cut for over 30 million people. Let me be clear with the House: It is fully costed and fully paid for in the plans announced today.”

In his statement, Sunak issued a tough warning for the public, saying the economy and public finances will likely worsen, ‘potentially significantly’. 

He says the cost of borrowing is continuing to rise and more borrowing ‘is not cost or risk-free’.

The chancellor said he will today publish a new tax plan which will ‘help families with the cost of living, create the conditions for higher growth, and share the proceeds of growth fairly’.