The 23rd of March saw the culmination of the penny counting and the peak of political cutting and thrusting, as the Chancellor laid out the government’s plan, for this current flavour of money troubles.
Where is the Sunshine Shining?
In theory, all workers had a little gain from the National Insurance (NI) threshold moving up to £12,570, in line with the personal allowance, a £330 paper saving to last year. Aimed mainly at average and lower earners, to give a little boost to the next year’s pay packet, this is good news for many with the bills going up. There is also a delayed promise to have a 1% reduction in income tax by 2024, right before the election of course.
We can’t all breathe easy, with fuel prices at the level they are but there has been the gesture of a 5-pence cut in fuel duty, which might help a business or family on the finer of margins. Many investment managers, like us, are keeping their eye on the price of brent crude (oil) already, for its role in the current economy.
Solar panels might become more popular this year as people look out and see the warm rays, and the removal of the 5% VAT on these and similar green products, makes them slightly more attractive and a potential way to get off the meter.
Finally, there is a little relief for small businesses that have their employment allowance increase to £5,000. Nice for a few new budding business owners there but not shooting the lights out.
Where are the Bulbs Struggling to Bloom?
There is still some cold in the air and the shorts are still in the drawer for the time being. Business owners will have to wrap up a bit warmer as they did not get much change to the national insurance contributions that they have to pay, which will continue to go up in May regardless. No change on the corporation tax hike due in 2023 either, so more downside to look forward to.
The cut to national insurance, though welcome, does not leave everyone better off. The increase of NI by 1.25% means that when you do pay it, you pay more. So, anyone earning over £38,970 per annum, is likely to be worse off under the new system. Though this is supposedly for our NHS, so less grumble here due to the tidy marketing done at the last budget.
The 5 pence tax cut in oil was received by the market, where the oil price went up by 5 pence too, so… yeh… let’s hope that doesn’t stick around.
What Does This Mean and What Can I Do?
Generally, it means that you will either get a little more or a little less in the pay packet each month, but you are probably going to spend a big wack of it on fuel anyway. No straight cures and that is just the way things are sadly, with inflation doing its best to make things even harder. However, there are some ways that you can make some tax savings if you know where to look.
You pay National Insurance on your earnings and there are ways that you can ‘reduce’ your earnings. So, if you are one of those people who now is going to be worse off in the new system, then get in touch and let’s make hay while the sun is shining. For more information, contact us here.
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