In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he sought to ease the impact of rising prices for households and businesses.
The Chancellor will lift the starting thresholds for National Insurance contributions (NICs). He also pledged a cut to income tax in 2024. However, the Health and Social Care Levy will still be implemented in April 2022.
For businesses, there is an increase to the Employment Allowance, as well as relief from business rates on a range of green technologies and help with training and the adoption of digital technology.
We hope our summary provides you with a useful update of the changes. If you have any questions in understanding how these affect you, please do get in touch.
Our full summary guide
Download and view our Spring Statement highlights and full summary guide [4mb] here.
At a glance
1. OBR on growth and inflation: According to the Office of Budgetary Responsibility, growth this year is expected to be 3.8% which is slower than previously predicted (6%) and the annual inflation rate is expected to increase from 6.2% in February , to average 7.4% for the rest of the year, but with a peak of 8.7% in the final quarter of 2022.
2. National Insurance contributions threshold to increase: To align the starting thresholds for income tax and National Insurance contributions (NICs) the threshold will increase from 6 July 2022 from £9,880 to £12,570.
3. Lower Profits Limit for self-employed to increase: This is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022 the Lower Profits Limit is increased to £11,908 and from 6 April 2023 the limit is increased further to £12,570.
4. Income tax reduction from April 2024: A reduction in the basic rate of income tax for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland to 19% from April 2024.
5. Fuel duty cut: Fuel duty for petrol and diesel was cut by 5 pence per litre across the whole of the UK. This measure took effect from 6pm on 23 March 2022 and is in place for 12 months.
6. Employment Allowance increased: The Chancellor announced an increase from April 2022 of £1,000 for eligible employers to reduce their employer NICs by up to £5,000 per year.
7. VAT cut on energy saving materials: A UK wide, time-limited zero rate of VAT from April 2022 for the installation of energy saving materials. This will apply to installations such as rooftop solar panels and is in addition to the extension of the VAT relief to include additional technologies and the removal of complex eligibility conditions.
8. Green reliefs for business rates to be introduced sooner: The government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill. It was announced in the Spring Statement, that these measures will now take effect from April 2022, a year earlier than previously planned.
Oscar heads our tax department and provides advice on tax structuring, planning and compliance services to entrepreneurs and their businesses.