Chancellor Rishi Sunak delivered his Spring Statement today. Many were hoping his announcements would help individuals and businesses in the face of increasing costs, with inflation at a 30 year high at 6.2%.
Many tax increases have already been announced – with increases to National Insurance from April 2022 to fund the increasing cost of social care and a Corporation Tax increase which takes effect from April 2023.
The National Minimum Wage is also set to increase from April 2022.
We have digested the Spring Statement and summarised the key points below:
Fuel duty – Fuel duty will be cut by 5p per litre until March 2023.
National Insurance (NI) threshold – the earnings threshold at which individuals start to pay National Insurance will increase by £3,000 to £12,570 from July aligning the NI threshold with the personal Income Tax allowance. This will save individuals up to £330 on the amount of NI they pay each year.
VAT on energy efficient materials – The VAT on energy efficient materials such as solar panels, heat pumps and insulation with have the rate of VAT cut from 5% to 0% for 5 years.
Employment Allowance – The relief which enables SMEs to benefit from a saving on their National Insurance bill will increase from April 2022 by £1,000 to £5,000.
Income Tax – It was announced the basic rate of Income Tax would be cut before the next general election to 19% in 2024.
In the Autumn budget the Chancellor promises to announce changes to the Apprenticeship Levy and to reform Research & Development Tax Credits.
The Chancellor also laid out his vision for a lower tax economy and set out a Tax Plan as part of the Spring Statement. The Government wants businesses to invest further and will look to enact long-term reforms to incentivise businesses to invest more in capital, people and ideas.
We understand many individuals and businesses are facing a period of increased costs and if you have any questions regarding the Spring Statement and how it impacts on you or your business then please get in touch on 01228 904 904.