Yesterday, two years to the day since the UK went into lockdown, the chancellor delivered his Spring Update in the UK. Things have changed drastically since Sunak delivered his Autumn Budget and against a backdrop of rising inflation, a cost of living crisis, and the economic impact of the war in Ukraine, there was pressure on the government to act.
The main announcements that will impact the majority were:
The basic rate of income tax will be reduced from 20p in every pound to 19p.
The threshold at which people start paying National Insurance on their earnings is increasing from £9,568 to £12,570 per year.
Fuel duty will be cut by 5p-per-litre.
The government will decrease VAT on energy-saving materials from 5% to 0%.
Our job at nudge is to take all the noise that’s happening in the world of finance and translate that into personalized, practical guidance on what action your employees should be taking. So, we’ve outlined exactly what these changes mean:
Someone earning £50,000 each year would see their income tax contribution fall from £7,486 to £7,112.
Currently, you don’t pay tax on the first £184 you make per week. From July, you will not pay tax on the first £242 you make per week. This will affect almost 30 million working people, with a typical employee benefitting from over £330 per year in tax cuts.
A 5p-per-litre deduction will decrease the overall cost of filling your vehicle up with fuel. It will also reduce how much VAT you pay (20% of the overall cost).
By reducing the overall cost of solar panels, insulation and heat pumps amongst other energy-saving materials, the government hopes to make energy efficiency more attractive. A typical household installing solar panels could save £1,000 plus an additional £300 off bills annually.
Behind the headlines, we know that the tax cuts only offset a 3rd of tax rises over the last year and a 6th over the last 2 years and that inflation is set to increase to nearly 10% over the next 6 months - yesterday’s Spring Statement is a stark reminder of the need for financial wellness.
We know that having confidence and control over your money comes from improved financial skills and knowledge, so I wanted to share how we are supporting our clients over the next few hours, days and weeks:
Personalized information for all users summarising how the budget affects them, based on the data they’ve shared with us, and how they’ve been interacting with nudge content. Everyone will be notified of this on their device of choice
A series of posts on their personalized feed, providing the next level of detail and the prompt to share this information with family and friends
Immersive education modules in response to inflation and interest rates, including ‘Save on your utilities’, ‘Financial resilience’ and ‘Prioritising making between debt and saving’
Timely articles on understanding payroll taxes and making the most of government support.
We understand that many organizations have rich benefits packages – so we’re encouraging our clients to utilize nudge to showcase further financial support following the announcement, such as discounts or hardship loans.
