Almost 28 million employees will soon get another 2p off their National Insurance (NI) bills, saving them on average £450 from April 6. Two million self-employed will save around £350.
These savings are on top of the earlier 2p NI cut that Hunt announced in November’s Autumn Statement, which came into force on January 6.
In total, the average employee will save £900 in tax over the 2024/25 financial year, while the average self-employed worker will save almost £700.
Given what we’ve all been through over the past few years, it’s something to celebrate. A combined tax cut of 4p in the pound is more than we might have expected at the height of last year’s cost-of-living crisis.
There were other positive measures two. Alcohol duty will be frozen, all the way through to February 25.
That’s good news for drinkers, good news for pubs.
There was the usual bad news for smokers, but they’d have to be smoking something pretty weird to expect anything other than an annual punishment beating from the Treasury.
Fuel duty remained frozen at 57.95p per litre, in a move that surprised nobody. It’s been held at that level since 2011 and Hunt was hardly about to hike it months before the nation goes to the polls.
His decision to extend the 5p fuel duty cut for another 12 months, reducing it to 52.95p, was also completely expected.
It’s still good news for motorists, though. Petrol and diesel prices have fallen sharply over the last year, but oil prices have increased in recent weeks.
A slight easing of the high income child benefit tax charge and an offer of 30 hours free childcare to any child older than nine months will help families a bit.
After that, I’m struggling to get excited. And I suspect voters will be too. Especially when they look at the details.
Thanks to repeated tax raids on Hunt and Rishi Sunak’s watch, most workers will still be handing more of their income to HM Revenue & Customs overall.
Hunt may have cut NI twice in three months but the six-year freeze on income tax and NI thresholds will remain in force all the way to 2028.
This is particularly hard on lower earners, as an estimated five million will find themselves paying tax when previously they wouldn’t have been.
If today’s £12,570 personal allowance had increased with inflation, it would have climbed to £15,225 from April.
Without Hunt’s meddling, someone earning a low wage of £15,000 would have paid £291.60 in combined income tax and NI in the next financial year, AJ Bell calculations show.
Instead, they will pay £680.40. That is £388.80 additional tax, as the cost of those frozen allowances more than outweigh the benefits of cutting NI from 12 percent to eight percent.
If the Chancellor wants to encourage people back to work it’s a funny way of doing it.
Middle earners will be happier, though. Someone on £35,000 a year will save around £370 a year as a result of Hunt’s threshold freeze and NI cuts.
Someone on £50,000 a year will save almost £970.
Higher earners will pay more tax, though. Someone earning £75,000 will pay £1,146 extra from April.
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There’s no rhyme or reason here. No strategy. No targeting. Hunt unleashes a punitive tax raid, worries about losing the next election, gives us something back.
The winners and losers in all this are all very random.
Pensioners will be feeling particularly hard done by as they don’t pay NI. They will not benefit from either the Autumn Statement or the Spring Budget.
They do pay income tax, but Hunt hasn’t touched that. Too expensive.
Cutting NI by 2p will cost the Exchequer around £10billion. A 2p income tax cut would have cost £14billion.
Perhaps pensioners will be in a forgiving mood, as they’re getting a generous triple lock uplift from April 6. I wouldn’t like to bet on it, though.
Hunt has little room for manoeuvre, of course. If he’d been too generous, he might have incurred the wrath of the bond markets, just like predecessor Kwasi Kwarteng did in that last year’s disastrous mini-Budget.
In today’s speech, the Chancellor repeatedly told us how Tories loved cutting taxes while Labour loved raising them. Who is he trying to kid?
