Financial Planning

Key takeaways from the Spring Statement, 2022

Key takeaways from the Spring Statement, 2022

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult an independent financial adviser.

In “normal” times, the Spring Statement is usually seen as an update from the Chancellor on the UK economy. Since COVID-19 hit the nation in 2020, however, it has become a more significant occasion where the government has announced key policy changes. 2022 has been no different with Chancellor Rishi Sunak outlining a kind of “mini budget” to address the rising cost of living across the UK. Here at Cedar House, we have already provided clients with a summary on the main provisions. Below, we talk more specifically about the key highlights, how they may affect you and what options you have with your financial planning. We hope you find this content useful. If you want to discuss your own financial plan with us, please contact our team for more information or to access personalised financial advice:

020 8366 4400 or


NI threshold rise

Since last year, many people expected that the Government would introduce a rise in National Insurance (NI) from April 2022 to help pay for the new “Social Care Cap”. However, with the cost of living going up in recent months, many lobby groups and business leaders were asking for the planned 1.25% rise in NI in April to be delayed or scrapped. In his Spring Statement, the Chancellor did not heed this call. 

However, he did say that the threshold on NI payments would rise by £3,000. This is much more than the previously planned £300 rise. In effect, this means that someone can earn £12,570 before they need to pay NI. However, bear in mind that this is unlikely to apply until July 2022. At most, this change could lead to a £330 reduction in NI. For lower-income households, this could help off-set some of the pain of rising energy costs – but not completely. However, for those earning between £45,000-£60,000, the policy change is likely to result in a nigher Ni bill.


Basic Rate income tax cut

One of the most notable announcements from the Spring Statement was the planned reduction in Basic Rate income tax – from 20% to 19%. This will not take effect until April 2024, however. This could coincide with the timing of a general election, as it is strange for a government to use its Spring Statement to make big commitments for two years away.

Should this be implemented it would, of course, help many UK earners save on income tax in the short term. However, bear in mind that it is likely to have knock-on effects with your wider financial plan. In particular, this could reduce the amount of tax relief that you can claim on your pension contributions (which is equivalent to your highest rate of income tax). As such, it may be worth talking to your financial adviser about increasing your pension contributions between now and 2024 – getting the most from the more generous tax relief system while it lasts.


VAT changes

It is no secret that the cost of living (inflation) is rising in 2022. Energy, in particular, is getting more costly for UK households, and Ofgem – the UK’s regulator – has increased the energy cap by 54% from early April. As such, many were looking to the Spring Statement for measures that could help alleviate this huge extra pressure on household incomes. 

Some relief did arrive in the form of an announcement that households will now pay 0% VAT on energy-saving equipment (e.g. solar panels and heat pumps). Also, a 5p cut in the duty charged on petrol and diesel is planned from now until March 2023 (i.e. a 6p fall per litre, resulting in an average saving of £3.30 at the pumps). However, these measures are unlikely to help many people significantly over the year ahead.


Notable exclusions

The Spring Statement contained some interesting ideas, but it has attracted a lot of criticism for not “doing enough” to address the rising cost of living. Universal credit, for instance, will not be changed and is set to rise by just 3% (amidst an inflation going up nearly 8%). Real household disposable income is now expected to fall at the fastest yearly rate since 1956, and notable figures such as Martin Lewis have publicly stated that they are “out of tools” to help people save money. In light of this, we encourage people to speak to their financial adviser about making sure that their financial plan can meet the possible challenges lying ahead. 

Do not panic, but take confidence that there is still much within your control when it comes to your wealth and finances. With a robust plan and good advice, you can still make positive steps towards your goals in 2022.



Helping your child onto the housing ladder is a noble aim. However, make sure you do not inadvertently harm your wealth and finances – or that of your child – without a strong tax plan.

Interested in discussing your financial plan with an experienced financial adviser? Get in touch today to discuss your financial plan with a member of our team here at Cedar House via a free, no-commitment consultation:

020 8366 4400 or


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