Martin Lewis has pinpointed the most important factors from Rishi Sunk's spring statement.
Chancellor Rishi Sunak announced upcoming changes to income tax, fuel duty and national insurance today, on March 23, 2022. Following the statement, Money Saving Expert founder Martin issued an almost five minute long video with his "instant instinctive response".
In the clip, he explained key points and what it means for you off back the of the spring statement. He shared the top five points from the statement that would affect people's personal finances.
READ MORE: Money Saving Expert Martin Lewis frustrated with Rishi Sunak announcement
Opening the piece to camera, he said: " The Chancellor has just sat down in his Spring Statement with five main announcements in there that affect people's personal finances, so I wanted to give you my initial instinctive reaction to what he said."
National Insurance changes
His first point focused on national insurance and how it is due to rise by 1.25% This means that those with higher salaries will be losing more cash soon.
Martin explained: "The big one was about national insurance. Now it was pre-announced and has been highly contentious that national insurance is due to rise by 1.25 percentage points, which actually increases the amount of national insurance, which is effectively a tax on income for those people by around 10%. People will pay 10% more national insurance because of that rise, roughly."
He added: "That is still in place, but to mitigate it, what the Chancellor has done he's changed the threshold at which you start paying it. So today you start paying national insurance once you earn around £9,600 a year and you start paying income tax once you earn around £12,600 a year. From July he's moving so these two levels will be at the same rate, which is sensible.
"So that means you won't pay national insurance now until you earn around £12,600 from July, £3,000 more than right now. The saving on that is £360, but of course, once you do start paying national insurance, because of the 1.25 percentage points extra that people will pay, people are going to pay more."
The money mogul stated that if you are earning between £9,600 and £35,000 you will either not pay any more national insurance than you currently do, or if you're on the lower end you will pay less. But, for those earning over £35,000, it is bad news as they could end up paying more.
Cut in fuel duty
Martin's next point was a slightly more positive one as it focused on the 5p cut in fuel duty. He explained how motorists around the country are going to pay less to fill up their tanks from now on.
The money expert worked out that it would probably be a saving of "just over a quid" on a typical tank of petrol being filled up. This means "5p less duty going to the chancellor and 5p more going in people's pockets".
VAT to be removed on home energy efficiency measures
The Chancellors statement claimed that home energy efficiency measures like solar panels and heat pumps will see the VAT removed. In response to this, Martin said that this was a "relatively small" gesture.
He claimed that it would only be a benefit for "those people who could afford to insulate or get better energy efficiency measures." He added: "It's not going to relive anyone short term with a huge heightened energy cost we're facing."
£500m being given to the household support front
It was announced that £500m being given to the household support front which is designed to help vulnerable people across the nation. Martin hoped this would be targeted towards household bills.
He encouraged people to get in touch with their local councils about this if they were struggling to pay energy bills on a lower income. He said: "I know some councils have been close to running out of these funds, so there will be more money coming to be able to support you and it's worth talking to your local council."
He wasn't overly impressed with the little help that is being offered from the government in regards to the energy crisis. He added: "That's it on energy so on energy, not particularly generous."
Income tax will drop to 19p
Martin described the income tax drop as a "rabbit out of the hat" move from Rishi Sunak. He explained that it is still a few years away from actually happening so didn't want to say too much on the matter.
He said: "We know we've got the £150 council tax rebate coming for those in bands A to D in April. You'll get it by in cash if you pay by direct debit if you don't pay by direct debit, then you will likely be told how to claim it and if you don't claim it, you'll get it as a rebate.
"And then there's the more controversial £200 loan not loan scheme coming in October. So limited help for energy. But I think what the chancellor would argue is, well, there's the household support fund to help the most vulnerable in energy and the cutting national insurance should offset it a bit. None of this will offset totally the rising energy bills, which are likely to be around £1,300 year on year increase in October, but it will mitigate it somewhat."
He added: "And then his rabbit out of the hat is that from 2024 likely to be an election year income tax a basic rate of income tax will drop to 19p. I don't plan to talk too much about that it's a long time away that ain't gonna help anybody right now."
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