FUEL duty will be cut by 5p from six o’clock tonight (23 March), with a £3,000 increase in the National Insurance threshold to follow, Chancellor Rishi Sunak has announced.
As part of his Spring Statement, Sunak said the fuel duty cut was “the biggest cut to all fuel duty rates ever” and would stay in place until March 2023.
The UK Treasury claims the measure represents a tax cut of around £2.4 billion over the next year. It also estimates that, “when compared with uprating fuel duty” in the next tax year, the 12-month cut represents a saving worth around £100 for the average car driver, £200 for the average van driver and £1500 for the average haulier.
The Petrol Retail Association has warned that the Chancellor and motorists must be “realistic in their expectations” of when independent forecourt retailers will be able to feed the duty cut through to prices at the pumps.
Gordon Balmer, executive director of the PRA said: “Forecourt operators have purchased the fuel they are currently providing at the higher fuel duty rate. As a result, they must first deplete their stocks and resupply with fuel bought at a reduced rate before motorists will see a change in pump prices.”
Less than one hour after the Chancellor’s announcement, Asda announced it would cut its fuel prices by 6p when the duty cut goes live. The reduction at the pumps includes a consequential 1p reduction in VAT and will see unleaded move back below 160ppl and diesel to 170ppl at Asda filling stations.
On National Insurance, the Chancellor said he was accelerating his plans to increase the payment threshold.
From July, workers will not pay National Insurance on earnings below £12,570, bringing NI in line with the lower threshold for income tax. The National Insurance primary threshold is currently set at £9,880. The Treasury said this change will help almost 30 million working people, with a typical employee benefitting from a tax cut worth over £330 in a year from July.
It also claimed that around 70% of National Insurance contributions (NICs) payers will pay less NICs, despite the Chancellor’s decision to press on with the introduction of the Health and Social Care Levy. Announced last September, the Health and Social Care levy will see the National Insurance rate increase by 1.25 percentage points, for both employees and employers, from 6 April. The hike will see employee NI contributions rise from 12% to 13.25% in the new tax year.
