Unprecedented, uncertain, never in living memory and historic are phrases that are often used all too often. However, in the past two and a half years it is fair to say these words and phrases have been heard a lot more with global situations ranging from the Coronavirus Pandemic, an energy crisis, climate change and war in Ukraine.
With rising inflation, an increasing number of priorities and global uncertainty the Chancellor of The Exchequer Rishi Sunak presented the 2022 Spring Statement on 23rd March 2022.
Below are just some of the headlines from this statement: –
Employment and Personal Taxation
- The Health and Social Care Levy goes ahead as planned from April 2022 (effectively increasing NIC rates for 2022/23).
For Further Information please see our previous blog regarding this subject and the impact on employees, employers and the self-employed.
- Class 1 employees NIC – the Primary Threshold of employees NIC will rise from 6th July 2022 to £12,570. This means that with effect from 6th July 2022 employees will not pay National Insurance on £1047.50 of their monthly wage or if the employee is paid weekly, they will not pay National Insurance on £241.73 of their weekly wage.
- Class 2 self-employed NIC – from April 2022, the starting threshold at which the Self-Employed are required to pay Class 2 National Insurance will increase to £11,908. The Self-Employed Individual is still able to opt into paying Class 2 National Insurance if their Self-Employed income is lower than this threshold.
- Class 1 employer’s NIC – From April 2022 the Class 1 employer’s NIC Threshold increased to £9,096 from £8,844 for the tax year 2021/22. Therefore, the employer will not pay the employer’s national insurance £757 on each employee’s individual wage per month if the employee is paid monthly or £175 on each individual employee’s weekly wage if the employee is paid weekly.
- Employer’s National Insurance Allowance – the Employment National Insurance Allowance (for smaller employers) increases to £5,000 for the 2022/23 tax year from £4,000 for the 2021/22 tax year.
- The basic rate of income tax is planned to be cut by 1% to 19% from April 2024 from 20% at present.
- Household Support Fund – an extra £500m will be made available to Local Authorities to support vulnerable households. It is important to be aware that because the additional funds are available to each Local Authority to provide support for vulnerable households how these funds are used may vary between Local Authorities.
- R&D relief – part of the reforms being implemented from April 2023 block deductions for overseas R&D work, but some exemptions have been confirmed (for regulatory reasons, eg clinical trials and geographical factors). In addition, companies will be able to claim R&D relief on projects supported by pure maths.
- Further reforms to R&D relief will be considered in a consultation to be published in the summer – this may include an increase in the rate of relief to ensure the UK remains a competitive location for R&D.
- Capital Allowances – The government will consider alternative options so that it is able to replace the super-deduction when it expires in April 2023
- Corporation Tax Rates – No additional changes were made to the Corporation Tax Rates which have already been announced to be introduced in April 2023.
Other Taxation Reliefs and Changes
- VAT on energy-saving materials will be reduced from 5% to 0% from April 2022 to April 2027 (this includes insulation, solar panels and wind turbines).
- A review of the Apprenticeship Levy (introduced in 2017 to encourage employers to use apprenticeships to upskill their workforce) will take place to determine whether the scheme is “doing enough”.
- Tax reliefs – In the interest of creating a fairer and more efficient system, the government plans to announce the simplification or removal of a number of existing tax reliefs in the lead-up to 2024.
- A review of Enterprise Management Incentives has concluded that they are fit for purpose and do not need to be reformed.
- Fuel duty is reduced by 5p per litre from 6 pm on 23 March 2022 (for one year).
Finding Out More
We will be writing more in-depth articles on some of these subjects as time goes by but if you would like to know more now please do not hesitate to contact us.
You can also find more about the Chancellor’s Spring Statement from https://www.gov.uk/government/publications/spring-statement-2022-documents.
Trying to negotiate the forest of taxation and the red tape associated with it is very often daunting, blinding and frightening often leading to sleepless nights, anxiety and a vision darkened by a view of “The Taxman” wrongly seen by many as someone from a low budget horror movie.
Why not let us bring some light to the situation and help guide you from the forest to a brighter future.
If you have any tax, accountancy or business concerns please feel free to get in touch and we will be happy to listen, discuss and walk beside you into the future.