THE CHANCELLOR has announced an immediate cut to fuel tax, and a rise to tax-free wage threshold as a means of helping with the rising cost of living.

Setting out his Spring Statement in the Commons today, Rishi Sunak said he would cut the rate of tax on petrol by 5p per litre from 6pm this evening, to be kept in place until March 2023. 

In another major announcement, the Chancellor said he would be cutting income tax rates from 20p in the pound to 19p by the end of the current parliament in 2024.

However in Scotland the rate is already 19p for the lowest earners, so the measures will bring England into line with Scotland's existing income tax level. 

And from July this year the level at which people are required to pay National Insurance would rise by £3000, from £9,570 to £12,570

Currently the threshold  for National Insurance payments is £9,570, while Income Tax is £12,570, so the change brings the thresholds to the same level. 

This change applies across the UK, including in Scotland. 

The Treasury said the plans would benefit 2.4million people in Scotland, saving around £330 per year due to the rise in NI thresholds. 

Mr Sunak said: "We’re slashing taxes for millions of hard-working people in Scotland, getting pounds in people’s pockets and helping pay cheques to stretch further – from July more than 2.4 million in Scotland will get a tax cut with the typical employee keeping £330 more each year.

“By cutting fuel duty, we’re making it cheaper for people in Scotland every time they go to the pump, which together with the freeze means people save £100 per car on average a year.

“We’re boosting small business growth by increasing the Employment Allowance – a tax cut worth up to £1,000 for thousands of businesses."

He also announced that he would be scrapping tax altogether on energy-saving measures for homes, such as solar panels, insulation and heat pumps for five years. 

He said he was doubling the Household Support Fund to £1bn, which would be made available to councils from April.

These councils will then decide who to allocate the funds to, but the scheme is only operational in England. 

The Treasury has confirmed that as a result of the announcements, the Scottish Government would receive £45m to spend in areas where legislation is devolved.

Speaking in the Commons, Mr Sunak said he wanted people to know he will “stand by them” in dealing with rising living costs, telling MPs: “Today I can announce that for only the second time in 20 years, fuel duty will be cut.

“Not by one, not even by two, but by 5p per litre. The biggest cut to all fuel duty rates – ever.

“While some have called for the cut to last until August, I have decided it will be in place until March next year – a full 12 months. Together with the freeze, it’s a tax cut this year for hard-working families and businesses worth over £5 billion, and it will take effect from 6pm tonight.”

The Chancellor linked his spending plans to the war in Ukraine as he addressed the Commons, saying he would build a "stronger, more secure economy" for the UK . 

He said: "We have a moral responsibility to use our economic strength to support Ukraine, and working with international partners to oppose the severe costs of Putin's regime."

Mr Sunak said Vladimir Putin had made a "dangerous calculation that democracies are divided, politically weak and economically insecure, incapable of making tough long term decisions to strengthen our economies."

He added: "His calculation is mistaken." 

Labour shadow Chancellor Rachel Reeves