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Tax Plan

Shifting away from a direct focus on the immediate pressures on the cost of living, the Chancellor unveiled his Tax Plan, setting out his intentions for the remainder of this Parliament, which is due to last until 2024 and comprises three elements:

  • Helping families with the cost of living
  • Creating the conditions for private sector-led growth
  • Letting people keep more of what they earn

As well as the temporary cut to fuel duty, the Chancellor said he will increase the annual Primary Threshold and Lower Profits Limit for National Insurance to £12,570 from July 2022, as part of the first commitment. Meanwhile, Class 2 NIC payments will be reduced to nil between the Small Profits Threshold and Lower Profits Limits.

He said that 70 per cent of workers would see their National Insurance payments fall, even after the addition of the Health and Social Care Levy, which comes into effect on 6 April as planned.

Next, he said that the Employment Allowance will rise from April 2022 from its current level of £4,000 to £5,000, saving businesses up to an additional £1,000 on Class 1 National Insurance contributions.

Moving to creating the conditions for private sector-led growth, the Chancellor said his focus would be on “capital, people and ideas”.

He announced his intention to cut and reform taxes on investing in businesses, building on the momentum of the super-deduction.

He also said the Treasury will engage with businesses on ways to cut taxes on investment and will confirm plans later this year at the Budget.

On people, the Chancellor said he would look at ways to offer more high-quality employee training.

On ideas, he said that further reforms to Research and Development Tax Reliefs would be announced at the next Budget, with the Government planning a boost worth £5 billion.

Moving to letting people keep more of what they earn, the Chancellor announced a surprise cut to the basic rate of income tax from 20 per cent to 19 per cent from April 2024.

He said that, alongside this, the Government will look to reform tax reliefs and allowances before 2024.