Summary of the Chancellors Spring Statement March 2022

The Chancellor took the opportunity of the Spring statement to announce some tax changes,

Duty

As expected, fuel duty was reduced – by 5p per litre for 12 months.

National Insurance

In advance of the Health & Social Care Levy coming in April 2023, all national insurance rates are set to go up 1.25 percentage points for a year from April 2022.  Many had asked for this to be cancelled but the chancellor has taken these alternative steps, to help offset the effect for low and middle earners.

In a reflection of old March Budget short notice tax changes, the threshold for paying employees national insurance is to be increased from July 2022, to align with the income tax personal allowance of £12,570 pa.

To confuse issues this means that those with an annual assessment period for National Insurance, e.g. Directors, will have a “blended” threshold comprising 13 weeks at current threshold and 39 weeks at the new higher threshold i.e. £11,908

This is to be matched with a similar blended threshold increase for National insurance for the self-employed.

However, this would exclude many self-employed from getting credits towards state benefits so there will be a new small profits threshold of £6,725 above which the self-employed will get credits, but which is below the lower profits threshold of £11,908 for payment.

To assist small employers with the additional cost of employers’ national insurance, the Employment Allowance has been increased by £1,000 to £5,000

Income Tax

The third unexpected tax drop was the announcement that the basic rate of income tax is to be reduced by 1% from 20% to 19% by 2024, the end of the parliament.

Energy Saving

To promote the take up of energy saving improvements, the scope and range of products that can benefit from reduced rate VAT is expanded, and installation may also be eligible for reduced rate VAT

And that reduced rate is now to be 0% not just 5% – for 5 years.

Green technology such as solar panels and heat pumps are also to be exempt from business rates.

Household Support

Funds provided to local authorities to assist households in need is to be doubled. The chancellor has decided this is the best way to target relief for cost of living.

Small Business

• 50% cut in business rates for small retail, hospitality, and Leisure businesses from April
• Help to Grow grants for high quality training

Advanced Notice

The chancellor has designed a “Tax Plan” which has been published with his ideas, but no real new details.

He has however specifically advised that he will be announcing new changes in the Autumn budget to the following, as current incentives are not having sufficient effect.

• Tax reliefs for training in Technical Skills
• Tax reliefs on business capital investment
• Reforms of Research and Development tax reliefs, to increase scope of allowable costs

End of Covid Easements

At this time may we also remind you of the end of temporary changes introduced for Covid

• Use of home allowance claims will lapse – so claim again if it still applies or get your company to pay you this £6 per week
• Cycle to work scheme – this benefit in kind is only tax free if at least 50% of use is to cycle to work
• 12.5% VAT on hospitality reverts to 20%
• Rent arrears may now be demanded by landlords