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The Chancellor’s vision for a lower tax economy

As part of Spring Statement 2022, Chancellor Rishi Sunk set out the government’s vision for a lower tax economy in its Tax Plan.

This three-part plan to strengthen our economy covers the remainder of the Parliament.

Sunk says it will:

Spring Statement 2022 enacts the first part of the plan, with tax cuts on incomes and energy to help families with the cost of living.

Fuel duty on petrol and diesel has been cut by 5p per litre for the next year.

From July, taxes for working people will fall as National Insurance thresholds rise – so people can earn £12,570 free of tax, saving the typical employee over £330 a year.

This tax cut means the UK now has some of the most generous tax thresholds in the world.

Tax Plan part two

The second part of the government’s Tax Plan is to boost growth and productivity. For decades, the UK has lagged international peers in investment in capital, people and ideas.

Once the super-deduction ends in April 2023, the government will cut taxes and enact long-term reforms to incentivise businesses to invest more in these three critical areas.

The government says it will “work with industry over the remainder of 2022” and “plan to announce our conclusions at the Budget later this year.”

The final part of the Tax Plan has a simple goal – to let people keep more of what they earn.

Cut in the basic rate of income tax in 2024

To that end, Sunk announced a cut in the basic rate of income tax in 2024 – this is a £5 billion tax cut for workers, savers and pensioners and will be the first cut to the basic rate in 16 years.

This Tax Plan represents the biggest net cut in personal taxes in over a quarter of a century. Sunk said it was only possible because of the difficult decisions taken by the government in the last twelve months.

Sunk said: “Cutting taxes sustainably requires prioritisation and a commitment to fiscal discipline. These are the foundations of this plan and our future low tax economy.”

To help with your financial tax planning, call The Hollies Bookkeeping Services on 01743 790086.