The Chancellor Jeremy Hunt delivered his Spring Budget on March 15th, following a year in which soaring inflation sparked a cost-of-living crisis and various Government support for struggling households and businesses.
As the announcements set the course for the UK’s economy in the next 12 months, individual households may wonder what it means for them.
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The Chancellor announced that he is extending the Energy Price Guarantee (EPG). The Government was planning to increase energy bills by 20% from April. However, the announced extension of the EPG will see energy bills capped at the current rates until July.
The EPG means a typical household in England, Wales, and Scotland will pay an average of £2,500 a year on their energy bill until July 2023. The price guarantee is a cap on the unit rate (kWh) of energy, so the price you pay will depend on your actual usage.
Prepayment meter customers will no longer be charged more to receive their energy. The chancellor announced that he was ending the “prepayment premium” in July, saving more than four million households around £45 a year on their energy bills.
The Energy Bills Support Scheme is a £400 non-repayable discount to households with a domestic electricity meter to help with energy bills. The discounts were paid automatically to consumers in instalments over 6 months with a £66 payment in October and November 2022, then £67 each month from December to March 2023.
Tax thresholds normally rise with inflation.
But from April, the 45p rate threshold is dropping, and other income tax & NICs thresholds are frozen. Frozen income tax bands mean you’ll pay more tax on your earnings than if thresholds had increased to keep up with rising wages.
Tax threshold freezes are considered by many as a sneaky way for the government to raise taxes without having to announce an increase in the headline rate of income tax.