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Spring Statement 2022

Rishi Sunak released the Spring Statement earlier this week. Here is a summary of the key points.

Fuel Duty cut

  • Cutting fuel duty on petrol and diesel by 5p per litre for 12 months.
  • The cut takes effect from 6pm on 23rd March 2022.

Employment Allowance increase

  • The Employment Allowance is a relief which allows eligible businesses to reduce their employer National Insurance contributions (NICs) bills each year.
  • From April 2022 the Employment Allowance will increase from £4,000 to £5,000.

Reforming Research & Development credits

  • From April 2023, businesses will be able to claim Research & Development tax relief on the storage of their vital data and pure maths research.
  • Draft legislation will be published this summer with a review to try to improve the Research & Development incentives.

Greater Business Investment

  • There will be a series of potential policy changes to the UK’s existing capital allowances regime, which the government will consider ahead of April 2023.
  • The aim is to encourage business investment to drive forward productivity growth.
  • The government will be engaging with business organisations and other interested parties from now until autumn.


National Insurance Threshold Raised

  • From July 2022, the annual National Insurance Threshold will increase from £9,880 to £12,570 for both employees (Class 1 NIC) and self-employed (Class 4 NIC).
  • From July 2022 onwards this will save a typical employee and self-employed individual over £330 and £25 per year respectively.
  • From April 2022, self-employed individuals will not pay Class 2 NIC on profits between the Small Profits Threshold (£6,725) and the Lower Profits Limit (2022/23 £11,908 and 2023/24 £12,570). This will benefit around half a million self-employed by up to £165 per year.
  • They will still be entitled to access entitlement to contributory benefits such as state pension, maternity allowance and employment & support allowance.

Basic rate income tax cut

  • The UK government will cut the basic rate of income tax by 1% from April 2024 to 19%. The current basic rate is 20%.
  • Scottish resident taxpayers already enjoy a 19% income tax rate on the first £2,096 (£2,162 for 2022/23) of their taxable income.

Abolishing VAT on energy saving insulation

  • The 5% VAT rate on energy saving insulation and solar panels will be reduced to zero for the next 5 years.
  • This will positively affect homeowners having materials like solar panels, heat pumps or insulation installed.
  • Due to the Northern Ireland Protocol this cut will not immediately apply to Northern Ireland. The Northern Ireland government will initially be compensated through the Barnett formula.
  • The government will reverse the EU’s decision to take wind and water turbines out of scope for VAT and zero rate them.

 

If you would like to discuss the information on this blog further please do not hesitate to get in touch.

Like always, any questions, please do not hesitate to ask.

 


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