Chancellors' Spring Statement 2022
Rishi Sunak announced his Spring Statement on 23 March 2022.
The main headlines:
Fuel duty cut by 5p per litre for 1 year
0% VAT on energy saving measures for homeowners, this means that the purchase of solar panels and insulation etc.
Support offered to local councils for more vulnerable people doubled to £1billion.
Retail, Hospitality and leisure sectors have a 50% reduction in business rates up to £110,000.
National Insurance threshold to be increased
The employment allowance will be increased to £5,000 per year from April 2022
The Chancellor also announced the start of his tax plan today.
The National Insurance threshold will be increased by £3,000 to £12,570 in July bringing it inline with the personal allowance for income tax. The chancellor announced that this will work out at a saving of £330.00 per year for those who pay National Insurance. However, in his announcement the Chancellor did not reiterate the fact that the National Insurance Rates were due to be increasing from April 2022 by 1.25%, this means that the earnings above the primary threshold will be taxed at 13.25% and earnings above the upper earnings limit will be taxed at 3.25%. This means that there will be a 3 month crossover period where the National Insurance Rates have increased but the threshold remains at the previous year’s level.
Examples based on full year of new rates and allowances.
Salary of £20,000
Old Rates and allowances (2021/22)
£9,880 * 0% = £0
£10,118 * 12% = £1,214.16
New Rates and allowances (July 2022 onwards)
£12,570 * 0% = £0
£7,430 * 13.25% = £984.47
Total saving of £229.69
Salary of £50,000
Old Rates and allowances (2021/22)
£9,880 * 0% = £0
£40,120* 12% = £4,814.40
New Rates and allowances (July 2022 onwards)
£12,570 * 0% £0
£37,430 * 13.25% £4,959.48
Total increase of £145.08
Salary of £100,000
Old Rates and allowances (2021/22)
£9,880 * 0% £0
£40,390* 12% £4,846.80
£49,730*2% £994.60
Total £5,841.40
New Rates and allowances (July 2022 onwards)
£12,570 * 0% £0
£37,700 * 13.25% £4,995.25
£49,730 * 3.25% £1,616.22
Total £6,611.47
Total Increase of £770.07
The Chancellors Tax Plan also included the following changes to be announced in the autumn budget and will be bought into legislation from April 2023:
Changes to the Research and Development Grants which will include relief being given for storage of data and pure maths research.
Annual Investment Allowance to be increased to £1million.
The Chancellor also announced that he intends to reduce the basic rate of income tax from 20% to 19% by 2024.
If you have any queries on any of the points raised in the spring statement please do not hesitate to contact your usual contact at BSN.