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Spring Statement 2022 – Our Summary

The press stories in the lead up to the Chancellor Rishi Sunak’s Spring Statement yesterday led us to believe a mini-Budget would be announced. However, as you will see from our summary, there was little more than the usual Spring Statement. The Chancellor believes in the once-a-year approach to major tax and spending changes, unlike some of his predecessors. However, in 2022, as in 2020 and 2021, events conspired to put paid to that single Budget aspiration. Instead, on the day the inflation rate was announced as having reached 6.2%, the Chancellor announced a range of tax cuts aimed at countering the cost of living crisis. 

  • There will be a temporary 12-month cut to duty on petrol and diesel of 5p per litre from 23 March 2022. 
  • VAT relief for the installation of energy saving materials (ESMs) will be extended and there will be a time-limited zero rate for the installation of ESMs. 
  • The primary threshold for Class 1 national insurance contributions (NICs) will increase from £9,880 a year to £12,570 a year from 6 July 2022, bringing it in line with the frozen personal allowance. 
  • For company directors, who are subject to special rules, the equivalent annual amount from July will be £11,908. From 2023/24, all employees will share the same £12,570 annual threshold. The maximum potential Class 1 employee NICs saving in 2022/23 is £269. 
  • For the self-employed, the lower profits limit will increase from £9,880 to £11,908 in 2022/23, rising to £12,570 in 2023/24. Class 2 NICs will not be payable if profits are below these limits. The maximum potential Class 4 NICs saving in 2022/23 is £208. 
  • The employment allowance for small businesses will be increased to £5,000 from April 2022. 
  • As part of the reform of research and development tax reliefs, from April 2023, all cloud computing costs associated with R&D, including storage, will qualify for relief. Furthermore, some expenditure on overseas R&D activities will still be able to qualify, for example, clinical trials that cannot be conducted in the UK. 
  • The Chancellor will also help to close the gap with US and European counterparts when it comes to business investment and skills training. 

We will examine the smaller print for further news of capital gains tax, inheritance tax or business relief changes in the main Budget later this year, but the headline is “no changes now”.  

At the end of his speech, in an unusual pre-Budget unveiling of a specific tax move, the Chancellor announced that the basic rate of income tax will be cut from 20% to 19% from April 2024 for taxpayers in England, Wales and Northern Ireland. 

Please click here for a full summary covering all announcements and the allowances for the year ahead.  

Naturally, all changes that affect you personally will be picked up at our regular reviews, but should you have any questions in the meantime, then please do not hesitate to contact your adviser.

 

The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information. This document reflects our understanding of current legislation. Past performance is no guide to future returns. Taxation is based on your individual circumstances and may be subject to change.