'Good call': Martin Lewis backs Rishi Sunak's tax changes in Spring Statement

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·Breaking News Editor, Yahoo News UK
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 Martin Lewis has welcomed changes to tax announced by Rishi Sunak. (GMB/Parliament)
Martin Lewis has welcomed changes to tax announced by Rishi Sunak. (GMB/Parliament)

Martin Lewis has welcomed Rishi Sunak's changes to national insurance announced in the Spring Statement.

The chancellor revealed a raft of new measures aimed at combating the rising cost of living facing millions of Britons.

One of the key measures unveiled by Sunak was the decision to increase the national insurance contributions (NICs) threshold by £3,000 to £12,500.

He said this would mean 70% of all workers will have their taxes cut by a greater amount than the extra burden they faced when NICs increases by 1.25 percentage points next month as part of the new health and social care levy announced last year.

Sunak said: “Our current plan is to increase the NICs threshold this year by £300, I’m not going to do that – I’m going to increase it by the full £3,000, delivering our promise to fully equalise the NICs and income tax thresholds.

Read more: What Rishi Sunak’s national insurance threshold increase will mean for you

LONDON, UNITED KINGDOM – MARCH 23:  Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street for the House of Commons to deliver his Spring Statement on March 23, 2022 in London, England. Chancellor Rishi Sunak is set to deliver the Spring Statement at the House of Commons as UK inflation hits a 30-year high amid escalating cost of living crisis.  (Photo by Leon Neal/Getty Images)
Rishi Sunak leaves 11 Downing Street for the House of Commons to deliver his Spring Statement (Getty)

“And not incrementally over many years, but in one go, this year. From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance.

“That is a £6 billion tax cut for 30 million people across the UK. A tax cut for employees worth over £330 a year. The largest increase in a basic rate threshold ever. And the largest single personal tax cut in a decade.”

Lewis, who has been very vocal in recent months in urging the chancellor to protect low-income workers, welcomed the move, tweeting: "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."

Speaking after the announcement, Lewis told BBC Radio Five Live he had "hoped for more, but expected less" in the spring mini-budget.

File photo dated 23/1/2019 of Martin Lewis who has accused the Business Secretary of causing an
Speaking after the announcement, Martin Lewis told BBC Radio Five Live he had 'hoped for more, but expected less' in the spring mini-budget. (PA)

He said the increase in the national insurance threshold would be a tax cut for those earning under £35,000 a year.

Citing the Institute for Fiscal Studies, Lewis said the "break even" annual salary would be £35,000, meaning anyone earning less than that had been handed a tax cut.

"From July, if you earn £35,000 or less, you will pay less national insurance than you do currently on the same income.

"For those at the lower end of the scale it could be a good few hundred pounds.

"If you earn £35,000 or more, than you will pay more national insurance than you do currently.

"So that is a help for those who are in the tens of thousands of income, and if there are two of you in the house then that could be a gain of £400 there which is another thing to partially offset the energy price rise."

Watch: Rishi Sunak announces National Insurance threshold will increase by £3,000

At a glance: How the Spring Statement affects you


Here are the main points from the chancellor's Spring Statement:

  • By the end of the current parliament in 2024, the government would cut the basic rate of income tax from 20p in the pound to 19p, which he said was “fully costed and fully paid for in the plans announced today”.

  • Fuel duty would be cut by 5p per litre for a year up until March 2023.

  • VAT on materials such as solar panels, heat pumps or insulation will be removed to help bring down energy costs, as well as on wind and water turbines.

  • Household Support Fund doubled to £1bn.

  • The chancellor said he would publish a “tax plan” as he announced the national insurance contributions threshold would rise by £3,000 “to fully equalise the Nics and income tax thresholds not incrementally over many years but in one go this year”.

  • Employment allowance for small businesses will rise to £5,000.

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