Against a backdrop of rising inflation, Chancellor Rishi Sunak presented his first Spring Statement on Wednesday, 23 March 2022.
In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he sought to ease the impact of rising prices for households and businesses.
The Chancellor will lift the starting thresholds for National Insurance contributions (NICs). He also pledged a cut to income tax in 2024. However, the Health and Social Care Levy will still be implemented in April 2022.
For businesses, there is an increase to the Employment Allowance and relief from business rates on a range of green technologies and help with training and the adoption of digital technology.
You should contact us before taking any action as a result of the contents of this summary.
Chancellor Rishi Sunak announced an increase in the annual National Insurance Primary Threshold and the Lower Profits Limit in his 2022 Spring Statement.
Employees pay primary Class 1 contributions. To align the starting thresholds for income tax and National Insurance contributions (NICs), the threshold will increase from 6 July 2022 from £9,880 to £12,570.
The Lower Profits Limit is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022, the Lower Profits Limit is increased to £11,908, and from 6 April 2023, the limit is increased further to £12,570.
In addition, there will be no Class 2 NICs on profits between £6,725 and £11,908. £3.15 per week is payable where profits are over £11,908.
From April 2022, there will be a temporary increase in the rates of NICs payable for employees, employers and the self-employed as a transitional provision in readiness for the introduction of the Health and Social Care Levy from April 2023.
With the increase to the thresholds announced in the Spring Statement, from 6 July 2022, employees earning between £242 (£190 from 6 April to 5 July 2022) and £967 per week will pay NICs at 13.25%. Earnings over £967 will attract a 3.25% charge. Employers will pay 15.05% on their employees’ earnings over £175 per week.
Although employees’ NICs only become payable once earnings exceed £242 per week, any earnings between £123 and £242 per week protect entitlement to basic state retirement benefits without incurring a liability to NICs.
For the self-employed, whose profits exceed £11,908 per annum, they will pay 10.25% on the profits up to £50,270 and 3.25% on profits over that upper profits limit.
The Chancellor announced the reduction in the basic rate of income tax for non-savings non-dividend income for taxpayers in England, Wales and Northern Ireland to 19% from April 2024. This reduction will not apply for Scottish taxpayers because the power to set these rates is devolved to the Scottish Government.
The change will be implemented in a future Finance Bill.
In a measure announced in the Spring Statement to help all motorists – individuals, small businesses and hauliers – fuel duty for petrol and diesel is cut by 5 pence per litre across the UK. This measure took effect from 6 pm on 23 March 2022 and has been in place for 12 months.
Employers can claim the Employment Allowance, which reduces their employer Class 1 NICs each year.
In the Spring Statement, the Chancellor announced an increase from April 2022 of £1,000 for eligible employers to reduce their employer NICs by up to £5,000 per year.
The allowance can be claimed against only one PAYE scheme, even if the business runs multiple schemes. Connected businesses, such as companies under the control of the same person or persons, are only entitled to one Employment Allowance between them.
The Chancellor announced a UK wide, time-limited zero rate of VAT from April 2022 for the installation of energy-saving materials. This will apply to installations such as rooftop solar panels.
This is in addition to the extension of the VAT relief to include additional technologies and the removal of complex eligibility conditions.
The Government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage and a 100% relief for eligible low-carbon heat networks with their own rates bill. It was announced in the Spring Statement that these measures will now take effect from April 2022, a year earlier than previously planned.
If you would like any advice about how the Spring Budget 2022 may affect your business, please do contact us by calling 0115 928 3228 or by emailing info@coalesco.co.uk
