You’ll start paying National Insurance later
The National Insurance threshold has been increased to £12,570, meaning you will only start paying the levy once you earn more than this.
This means you’ll start paying National Insurance at the same time as you start paying income tax.
The threshold is currently £9,568. It was due to go up to £9,800, but this has been updated because of higher inflation.
This will have the most impact for people earning between those two figures – over £9,800 but less than £12,570. They’ll be spared from paying National Insurance, and from the 1.25 percentage point rise.
But if you earn over that threshold, there will also be some benefit – as you’ll be paying National Insurance on less of your income.
Sunak, despite pressure from Tory benches, did not scrap the planned 1.25 percentage point rise to National Insurance.
Money Saving Expert Martin Lewis estimated that, for anyone earning under £39,000, the rise in National Insurance would be cancelled out by the increasing threshold.
Income tax is being cut, but not for two years
Sunak also announced, with great roars from his colleagues on the Conservative party benches, that the basic rate of income tax would be cut from 20p to 19p in the pound by 2024.
“A tax cut for workers, for pensioners, for savers. A £5bn tax cut for over 30 million people,” the chancellor said.
However, as Sunak mentioned, this will not come into effect immediately – but the OBR expects “inflation to be back under control, debt falling sustainably and the economy growing” by then.
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Lib Dem leader Sir Ed Davey told the BBC the tax cuts wouldn’t help struggling families.
“People are drowning with those higher energy bills, those higher food costs, those higher fuel bills. They needed a life boat and the chancellor has utterly failed them,” he said.
A tank of petrol is going to get slightly cheaper
Sunak announced a reduction in fuel duty of 5p – after being frozen at 57.95 pence per litre since 2011.
It’s great news if you have a car and concerns about prices at the pump. In fact, the more petrol your car gurgles through, the more you’ll benefit from this.
The cut will reduce the £91.87 cost of filling a 55-litre tank by £3.30, Sky News estimates.
In response to the news, Asda announced it will cut fuel prices by 6p a litre from this evening.
If you don’t own a car, there may be some secondary benefits. The cut is aimed at helping to decrease transport costs – one of the main supply-chain drivers of the soaring inflation in the economy – in the hope of cooling things down.
But climate experts told The Big Issue the fuel duty cut would make more of a difference to wealthier Britons.
Paul Tuohy, chief executive at the Campaign for Better Transport (CBT) said: “A cut in fuel duty will only serve as a temporary respite for richer drivers and do little to help those on the lowest incomes who may not even own a car.”
Local authorities will get a total of £500m to help households struggling with essentials
Sunak announced a doubling of the Household Support Fund – money given to local authorities to help households struggling with essentials.
The initial £500m covered October 2021 to March 2022. Sunak announced a fresh £500m for the fund.
You can apply to the fund through your local council.
But Paul Johnson, director of the Institute for Fiscal Studies said the overall package of help would not compensate for the worsening economic climate..
“There’s still going to be a lot of households that are significantly worse off over the next year,” he told the BBC. “But what he has done this time round is reduce that impact for low and middle-earners.”
What wasn’t in there
Charities and campaigners were quick to point out Sunak’s mini-budget was as significant for what it left out as for what it included.
Universal Credit is scheduled to increase by 3.1 per cent in April – a rise which becomes a real-terms fall when the effects of 7.4 per cent inflation are felt. Sunak did not mention Universal Credit or other benefits in his speech.
Crisis and Shelter, two of the UK’s leading housing and homelessness charities, called for an increase to housing benefit to protect those on the sharp end.
“If we’re going to prevent rising homelessness this year, housing benefit has to be fit for purpose,” Polly Neate, Shelter’s chief executive said.
Matt Downie, Crisis chief executive, said: “What’s clear from this statement is that people up and down the country will be pushed into homelessness. It will not give support to families facing the cost-of-living crisis.”