Sunak Pledges Tax Cuts on the Way for Landlords in Spring Statement
Landlords will pay less tax, promises Chancellor Rishi Sunak in his Spring Statement 2022 - but must wait for up to two years for the cut to take full effect.
The Chancellor announced several tax measures covering landlords and holiday let owners during his 45-minute speech to MPs thronging a packed Parliament.
Sunak's speech was focused on how the aftermath of the COVID pandemic and the war in Ukraine were disrupting the global economy leading to higher energy costs and a rising cost of living.
Indeed, news that last month inflation soared to 6.2 per cent and is forecast to rise to a 40-year high of 8.7 per cent later this year.
But the Chancellor managed to pull a rabbit out of the hat with his final pledge, a promise to cut the basic income tax rate by April 2024.
Spring Statement 2022 at a glance
- The income tax cut will save the average taxpayer £175 a year and is the first time the rate has gone down in 16 years - by a penny to 19p in the pound.
- The amount individuals can earn from July before paying National Insurance Contributions (NIC) rises by £3,000 to match the income tax personal allowance of £12,570.
At face value, some workers could save £330 a year, but this saving could disappear because Sunak did not include the new 1.25 per cent Health and Social Care Levy that clicks in from April.
- Drivers gain a 5p a litre cut in fuel duty for a year from 6 pm on the day of the speech, but tax allowances for mileage stay the same.
Sunak says the most significant fuel duty cut ever, saving the average car diver £100 a year and the average van driver £200.
- Landlords pay no VAT on energy efficiency upgrades to properties they own. The works include adding insulation and installing solar panels and heat pumps.
What the Chancellor said
Sunak clarified that imposing sanctions against Russia comes at a cost for taxpayers. How the war with Ukraine is resolved presents a risk to Britain's economic revival after Brexit and COVID.
“This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century,” he said.
“Like our actions against Russia, I have been able to do this because of our strong economy and the difficult but responsible decisions I have had to make to rebuild our finances following the pandemic.
“Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come.”
Tory tax plans revealed
The aptly-named Tax Plan is vital for the Chancellor's Spring Statement 2022.
However, he seems to rule out further income tax cuts this Parliament in his written vision' for a lower tax economy.
Sunak says: “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. These tax cuts will provide meaningful support to tens of millions of people.“
If that's the first part of the plan, then it seems no more income tax decreases are coming.
The second step of the plan relates to stimulating economic growth by investing in innovation and productivity.
Lastly, the Chancellor's vision is about helping people keep more of their money.
Spring Statement 2022 FAQ
What is the Spring Statement 2022?
The Spring Statement is made by the Chancellor of the Exchequer in the House of Commons every year, usually around March. The statement reviews the economy's performance, offers forecasts and details tax changes.
What's different about Spring Statement 2022?
Usually, the Chancellor offers an economic review covering the period after the last Budget. This time, he decided to announce some tax measures to help relieve the cost of living crisis the country is facing.
How do supply chains drive up prices?
A lack of lorry drivers and disruption following Brexit and the Russo-Ukrainian War has pushed up the price of fuel, which in turn has triggered a massive rise in the cost of living as goods and materials cost more to produce and deliver.
How do sanctions hit prices at home?
A ban on Russian oil and gas across most of Europe and North America has seen the price of oil surge above $100 a barrel, igniting cost of living increases. These increases mean British businesses must pay more for imports and the cost of producing goods.
When is the next Spring Statement?
The following Spring Statement is not scheduled until March 2023 on a date to be announced.
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