The Spring Statement 2022
Today, Rishi Sunak, delivered an update on the tax and spending plan issued by the British government. Usually the Spring Statement is just an update, not typically including drastic changes, however with the current state of the British economy many have been calling this a "Mini-Budget", expecting more significant changes than usual.
Rising costs, caused by increasing energy prices and made worse by the war in Ukraine, have become a real problem for households and businesses accross the UK. The government has come under increasing pressure to make changes now, to prevent households and businesses suffering.
What has been announced?
Households & Individuals
From July 2022 the government has announced that the National Insurance Primary Threshold and the Lower Profits Limit will increase to £12,570 per year, from £9,880. This means that employees will only make Class 1 National Insurance contributions after reaching this threshold. This will mean that employees on lower incomes will pay less in National Insurance. The announcement comes after pressure for the government to revert on its decision to increase the rate of national insurance from 12% to 13.25%.
For the full list of income tax and National Insurance rates and thresholds can be found here - Rates and thresholds for employers 2022 to 2023 - GOV.UK (www.gov.uk)
From April 2022 self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will not pay Class 2 National Insurance contributions, but will still continue build up National Insurance credits.
The government has announced a temporary 12-month reduction to the duty paid on petrol and diesel of 5p per litre. The aim is to soften the flow of dramatically increasing fuel prices. The government estimates the following average savings:
For UK car drivers - £100 per year
For UK van drivers - £200 per year
For hauliers - £1,500 per year
VAT Relief for Energy Efficient Installations
From April 2022 the government is extending the VAT relief available for the installation of energy saving materials by introducing a temporary zero rate for such installations. Installation of items such as solar panels for domestic properties will be included. The government estimates that the average household will save £1,000 on the installation of solar panels.
Small and Medium Size Enterprises
The business rates multiplier for the 2022/23 tax year will not increase. A 50% Business Rates Relief will also be available for eligible businesses within the retail, hospitality and leisure sector.
From April 2022 a 100% relief will also be available for low-carbon heat networks with their own rates bill.
Help to Grow Scheme
The government is continuing the roll out of its Help to Grow scheme which offers training courses in leadership and management as well as grants & subsidies for approved software for eligible SMEs. Full details of the scheme and eligibility criteria can be fund here - Help to Grow – Take your business to the next level (campaign.gov.uk)
Annual Investment Allowance (AIA)
The Annual Investment Allowance will stay at the £1 million limit until 31st March 2023. This allows businesses to claim 100% of qualifying expenditure against their taxable profits for the year. This forms part of the government's plan to make business investment more attractive for businesses across the UK,
From April 2022 the Employment Allowance, which allows eligible businesses to reduce their National Insurance Contributions, has been increased from £5,000 per year, from £4,000. More details on the eligibility criteria for the allowance can be found here - Employment Allowance: Check if you're eligible - GOV.UK (www.gov.uk)