Spring Statement 2022

Sunak’s Spring Statement

At the start of this year very few tax changes would have been expected in today’s Spring Statement (these are usually saved for the main budget in Autumn), but a perfect storm of rising costs and future inflationary pressures for both households and businesses forced the chancellor’s hand to announce a range of tax and NIC cuts.

One of the main headlines was a reduction in the basic rate of income tax for the first time in 16 years – although it is disappointing that its introduction is not until 2024 (but partly understandable given its cost of over £5 billion per year).

Individuals have been given more earlier support by the alignment of the NIC threshold with the personal income tax allowance of £12,570 – this increase in the NIC threshold by £3,000 in July 2022 will save taxpayers £330 per annum and largely offset the additional cost of the 1.25% health and social care levy that was announced last year and takes effect on 6 April 2022.

Whilst the chancellor resisted calls to abolish the 5% VAT rate on home electricity and fuel bills, he acknowledged the rising costs of energy for homeowners by abolishing VAT on energy saving materials, such as insulation, heat pumps and solar panels.

A cut in fuel duty would have been unheard of last year against the backdrop of important environmental initiatives such as the UN Climate Change Conference in Glasgow, but the chancellor today announced a temporary reduction of 5p/litre which will help both households and businesses during the next 12 months.

Businesses were also given welcome support with a £1,000 increase in the Employment Allowance (effective from 6 April 2022) and the promise of further tax reforms which the government will consult on during the Summer in the run up to the main Autumn budget.  It will be very interesting to see if the government still push ahead with the one-third increase in UK corporation tax rates (from 19% to 25%) which was announced last year and is set to be introduced in April 2023.  Naturally we will keep you informed during the course of this year on any significant developments that take place in relation to these tax consultations.

The Spring Statement announcement contains the following topics:

• Income Tax & NIC
• VAT
• Fuel Duty
• Household Support Fund
• Research & Development

Please click here to read and download our Spring Statement 2022 highlights.

If you have any queries on the Spring Statement 2022 please do not hesitate to contact one of our tax specialists on 01228 530913 or 01768 864466.