Spring Statement 2022 – An Overview
Today Rishi Sunak has delivered his Spring Statement. It was expected to be somewhat low key, but as Britain faces a cost-of-living crisis with inflation spiralling, the Chancellor is under pressure to do more to support households and small businesses, and today’s statement has become more of a “mini-budget”.
Sunak talked about his priorities over the next two years being to
- Help families with their cost of living;
- Create conditions for growth in the economy; and
- Ensure the proceeds from growth are fairly distributed
Here we summarise his key announcements.
Fuel duty will be cut by 5p per litre until March 2023 from 6pm tonight.
According to calculations from the RAC, a 5p cut takes fuel duty prices from 57.95p per litre, down to 52.95p. Based on Tuesday’s figures, this could drop average prices to 162.3p per litre of petrol and 173.7p for diesel. This would equate to a saving of around £3 on the cost of filling a 55-litre family petrol car.
Energy efficiency measures
Installing energy efficient equipment such as solar panels, heat pumps and roof insulation will now have a 0% VAT rate (reduced from 5%).
Household support fund
The £500m support fund set up by the government last year to help fund the poorest households will be increased to £1bn from April 2022, allowing local authorities the funds to help those in need within their community.
Whilst the planned 1.25-percentage-point rise in national insurance contributions are remaining as a “dedicated funding source” for health and social care, the national insurance threshold will be increased to £12,570 from July 2022. This will bring the threshold in line with the personal allowance, meaning that workers will be able to earn £12,570 before they pay any NI or income tax.
In order to help small businesses, the allowance will be lifted from £4,000 to £5,000 on 6th April 2022.
Research and development tax credits are to be reformed with the potential to make the R&D expenditure credits more substantial this autumn, by increasing the scope of R&D activity and generosity of reliefs.
Incentives for training and apprenticeships
There will be a review over the summer of the apprenticeship levy with a view to creating more support for small businesses. More news will follow in the Autumn.
With the super deduction for capital expenditure only being a temporary measure (due to stop in March 2023), Sunak will be considering other measures to continue to cut tax rates in business investment, which will be shared in the Autumn.
Income tax basic rate
The basic rate of income tax is to be cut from 20p in the pound to 19p before the end of current parliament in 2024.
Sunak made it clear during his statement that public finances would likely get worse and that additional public borrowing would be limited. This will mean we may see measures further down the line to increase the tax take.. so it will be interesting to see if he can remain focussed as he said on People. Capital. Ideas….
If you have any questions about how the announcements made in the Spring Statement will affect your personal or business taxes, don’t hesitate to contact us.
Book a free call
Leave your details and we will email you to arrange a call back to discuss your accountancy needs.