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No Cut On Window VAT – Another Kick In the Sunaks
Mike Parczuk, MD of window firm Sternfenster, has written angrily in response to the Chancellor’s Spring Statement making some home improvements zero...
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Tax – Good News On Fuel & NI But Windows Blown Out Again
Chancellor Rishi Sunak has announced cuts in fuel duty and national insurance and promised no VAT on energy efficiency home improvements – but not included windows and doors yet again.
Sunak’s Spring Statement (or Mini Budget) was delivered on 23 March 2022 and revealed a new ‘Tax Plan’ to ease the rising cost of living. He has cut personal taxes and fuel duty and raised National Insurance thresholds – the Chancellor claims his moves will the typical employee over £330 in the year from July.
Sunak says 30 million people will benefit from the NI threshold rise.
Fuel duty on petrol and diesel by has been cut by 5p per litre for the next year.
National Insurance starting thresholds will rise to £12,570 from July.
Money Saving Expert
Martin Lewis, the Money Saving Expert, said on his Twitter feed ‘This is the big one - increasing the National Insurance threshold so it now matches Income tax from July. That £3,000 rise of threshold to £12,570 is a gain of £330 a year. And more than offsets the 1% rise for many on lower incomes. Good call.’
However, a planned increase in the overall rate of National Insurance will still go ahead – up 1.25 (as opposed to the 1% quoted by Lesis) from 12 per cent to 13.5 per cent. It kicks in on April 6.
Chancellor Sunak told Parliament the changes mean around 70 per cent of workers will actually have their tax cut by more than the increase. He said: “From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance.”
For businesses
The Spring Statement also sets out measures to boost business investment, innovation, and growth – including a £1,000 increase to Employment Allowance to benefit around half a million SMEs. Employment Allowance is a relief which allows smaller businesses to reduce their employers National Insurance contributions bills each year – from £4,000 to £5,000. The cut is worth up to £1,000 for half a million smaller businesses and als0 starts on 6 April. As a result, 50,000 of these businesses will be taken out of paying NICs and the Health and Social Care Levy, taking the total number of firms not paying NICs and the Levy to 670,000.
And with UK employers spending just half the European average on training their employees, the Chancellor said he will examine how the tax system - including the operation of the Apprenticeship Levy – can be used to encourage employers to invest in adult training.
Fuel
The Chancellor announced that fuel duty for petrol and diesel will be cut by 5p per litre from 6:00pm on 23 March to help drivers across the UK with rising costs – although fuel prices at the pumps are expected to stabilise and gradually fall back according to the RAC not including the cut in fuel duty. The 5p duty cut is for one year only.
2024
The basic rate of income tax will be cut by 1p in the pound in 2024, when the Office for Budget Responsibility is predicting inflation will be back under control – although what ‘under control’ looks like has not been specified.
BEIS
Kwasi Kwarteng - Secretary of State at the Department of Business, Energy and Industrial Strategy who often acts as Sunak’s sidekick (and was equally responsible for the disastrous Green Homes Grant) Tweeted ‘Fuel duty cut by 5p, NI threshold up, saving £330/yr, £1bn Household Support Fund, Basic Income Tax cut to 19p from 2024 ...plus £9.50 p/h Living Wage boost next week.’
However, ears will most prick up at Kwarteng’s tweeted announcement of ‘0% VAT on home insulation’.
Windows not included – again
Households will pay no tax on energy efficiency improvements for the next five years – so that’s solar panels, heat pumps and insulation (particularly roof insulation) – and if you can afford a wind or water turbine, they will be zero VAT rated as well.
Sunak said installing solar panels would see a tax saving of £1,000.
Sunak also said that a Green Homes Grant Voucher would cover most of the cost of the installation of a heat source pump before the Voucher Scheme was scrapped – without realising a Voucher would not even cover half the install cost. He also said there might be enough value left in the Voucher after paying for a heat pump to then pay to upgrade from single to double glazing (it seems Kwasi Kwarteng had borrowed his calculator on that day).
The installation of heat pumps will now be subsidised by the government in a different scheme – rendering them being zero rated virtually pointless.
A new Efficiency and Value for Money Committee will be set up to cut £5.5 billion worth of cross-Whitehall waste – with savings to be used to fund public services.
Household Support Fund
Chancellor Sunak announced that there will be an extra £500 million for the Household Support Fund, which doubles the total amount to £1 billion to support the most vulnerable families with their essentials over the coming months
Picture: When it's spring again.
Article written by Cathryn Ellis
23rd March 2022