All the tax changes Rishi Sunak announced in his Spring Statement explained

CHANCELLOR Rishi Sunak unveiled a number of tax changes in his Spring Statement today – we drill down into how it will affect YOU.

Rishi Sunak delivered his plan of action to help Brits as they battle against a crippling cost of living crisis.

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A number of measures to help families announced were announced – including a cut to fuel duty from 6pm tonight and VAT is now scrapped on home insulation costs.

But you’ll want to know whether there’s anything in the Spring Statement that could mean you’re paying more – or less – tax.

We explain all the tax changes announced today – and how it could affect your finances.

Income tax

Income tax takes out a cut of your earnings once they’ve reached a certain threshold.

The tax rates increase with the more money you earn.

Rishi Sunak announced that income tax will be cut by 1p – which comes as a huge boost to workers.

That’s because the cut will mean that the basic rate of income tax will go down from 20p to 19p in the pound.

It will make the average taxpayer £175 better off, according to the Spring Statement small print.

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Over 30million people will benefit from the change – but not yet.

That’s because the cut won’t roll out for another TWO YEARS – until April 2024.

It means Brits will have to wait to benefit from the change – despite seeing their budgets squeezed to the max right now under a cost of living crunch.

Stepchange chief executive Phil Andrew said: “The future cut in income tax will also – eventually – help working households.

“However, in the here and now the growing cost of living pressures on working households on low incomes and non-working households isn’t being alleviated.

“It’s very difficult to see how those already struggling will avoid seeing their situation worsening.”

National Insurance

Brits were fuming when Boris Johnson announced last year plans to hike National Insurance up by 1.25 percentage points.

The tax hike would help to cover the cost of spiralling social care, he said.

Despite facing calls to scrap plans to raise the tax, it was confirmed once and for all that it will go ahead.

How much extra you will pay depends on how much you earn – we’ve broken down the increased costs in a handy explainer.

In an attempt to soothe the blow, Mr Sunak did say today that the threshold at which you start paying National Insurance will rise.

It will increase from £9,500 to £12,570 from July.

Hargreaves Lansdown senior personal finance analyst Sarah Coles said the move will pull workers “back from the brink”.

She added: “It will mean 70% of people pay less NI, despite the hike in the rate in April, and will come as a real relief to those who are struggling with rising prices.”

Tax changes for self-employed

If you’re self-employed, you’ll want to know about how the National Insurance changes will affect you too.

The small print in the Spring Statement papers states that while raising the National Insurance threshold will mean a tax cut for those employed worth over £330, the equivalent saving for the average self-employed worker will be worth over £250.

But lower earning self-employed earners will also benefit from another measure hidden in the documents.

Brits paying Class 2 National Insurance Contributions – which is what you’ll currently pay if your profits are £6,515 or more a year – will see changes to how they’re charged the tax from the 2022/23 financial year onwards.

They will not pay the levy on profits if they earn £11,908 or less for the 2022/23 tax year – but the tax will kick in if your profits go beyond this threshold.

Then for the 2023/24 financial year, you’ll be able to earn £12,750 before paying any NIC.

This will benefit around half a million self-employed people by up to £165 a year, according to the Spring Statement documents.

This post first appeared on thesun.co.uk