On 23 March 2022, the Chancellor of the Exchequer delivered his Spring Statement, providing an update on the current economic climate and his plans to help people in the UK with increasing energy costs, the wider ‘cost of living crisis’, and the continuing aftereffects of COVID-19.
With the OBR now estimating that inflation with average 7.4% this year, three “immediate measures” were announced:
- A cut in fuel duty by 5p per litre, from 6pm tonight (23 March 2022) until March 2023
- VAT on energy-saving devices (e.g., solar panels) to be cut to zero
- An additional £500 million investment into the household support fund to allow councils to support poorer families, taking this to a total of £1 billion
Beyond these headline support arrangements, the Chancellor then announced his wider tax plans, including in particular:
- The threshold at which National Insurance Contributions become payable will increase by £3,000, to £12,570, bring this into line with the Income Tax personal allowance and providing a tax cut of £330 per year for most employees.
- The Employment Allowance, which gives relief for smaller businesses’ National Insurance payments, will increase from £4,000 to £5,000 from 6 April 2022.
- The basic rate of income tax will be cut by 1% in 2024, from 20% to 19%.
- Tax rates on business investments will be cut in the autumn.
- The business rates discount of 50% for retail, hospitality and leisure businesses was confirmed to take effect from April 2022, with possible savings of up to £110,000.
- Green technology, including solar panels and heat pumps, will be exempt from business rates starting April 2022.
- There will be a wider reform of the R&D tax credits regime, with draft legislation to be published in the summer and the potential for increased generosity.
Further detail will inevitably become available as today’s announcements are reviewed over the coming days. Your usual DSG contact will always be happy to discuss the impact of these and any other such development on you and your business.
Download our briefing document here.