Spring Statement 2022

The Chancellor, Rishi Sunak, delivered his Spring Statement today, 23rd March 2022.

Placing much emphasis on the strength of our economy, despite the consequences of current events and the impact on cost of living.

He cited “People should know we will stand by them”.

Once again, this was a Statement with lots of stats and little detail, but we’ll be getting behind the scenes over the coming days to reveal more key points and will update, with this summary below in the meantime. He announced his;

first 3 immediate measures

1. For motorists - Fuel Duty will be cut by 5p per litre from 6pm tonight – until March 2023 (valid a full 12 months).

2. For homeowners - homeowners will pay zero VAT on energy efficiency measures like solar panels, heat pumps or insulation for the next 5 years.

3. For vulnerable households - doubling the Household Support Fund to £1bn, with the additional £500m to be received by local authorities from April 2022.

With the cost of borrowing continuing to rise – the Government is forecast to spend £83bn on debt interest this year, being 4 times more than spent last year. Rishi stated they have “taken difficult decisions” with an emphasis on bringing debt down. In order to do so, Rishi confirmed he is publishing a tax plan today, with the aim of:

1. Helping families with the cost of living

2. Higher growth – with plans to be put forward for the Autumn Budget

3. Sharing the proceeds of growth more fairly

The Key Tax Points Are;

• The Health & Social Care Levy will remain and come into effect from April 2022, meaning National Insurance and dividend tax rises of 1.25%.

• The National Insurance Primary Class 1 Threshold and Lower Profits Limit for Class 4 will increase by £3,000 to £12,570 in line with the personal allowance – with effect from 6 July 2022, meaning that for 2022-23 this will be pro-rated.

• Class 2 National Insurance will not be payable on self-employed profits up to the Lower Profit Limit from April 2022, although individuals will still continue to get National Insurance credits for things like state pension on earnings above the Small Profits Threshold.

• The Employment Allowance will increase from £4,000 to £5,000 from April 2022.

• The basic rate of Income Tax will be cut by 1% from 20% to 19% in 2024.

Future Promises

In the Autumn Budget, Rishi Sunak suggests they will;

• Continue to reform R&D tax relief

• Continue to review the Help To Grow management scheme

If you want to want to refresh your knowledge following the last Budget in October 2021, you can read more here.

We’ll be following the small print closely over the coming days for further updates…

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FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment, and professional services. Our clients vary in size from self-employed sole traders, small enterprises and medium-sized businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.