Spring Statement 2022

Today, Wednesday 23 March, Rishi Sunak delivered his eagerly awaited Spring Statement just hours after the announcement that inflation was at its higher level for 30 years.

The Office for Budget Responsibility (OBR) had warned that there is unusually high uncertainty around the outlook and estimates that average inflation for this year will be 7.4% with the economic growth expectation downgraded to 3.8% this year.

Cost of Living

The Chancellor announced three immediate actions to help people through the current cost of living crisis, these were:

  1. A 5p cut on fuel duty will come into force from 6pm Wednesday 23 March, this is the biggest cut to fuel duty ever and will be in place until March 2023.
  2. For the next 5 years homeowners will pay 0% on energy saving materials such as solar panels and heat pumps as Rishi Sunak cuts the VAT rate from the current rate of 5%.
  3. The Governments Household Support Fund will be doubled to £1bn from next month. This fund is provided to local councils to support vulnerable households.

National Insurance

The planned 1.25% increase on National Insurance Contributions (NICs) will still go ahead as planned in April.

However, from July 2022 the NICs threshold will increase in line with the Income Tax Personal Allowance to £12,570.

Income Tax

It was also announced that by the end of the Parliament in 2024 the rate of basic rate income tax will be reduced from the current rate of 20% to 19%.

Small Businesses

For small businesses, the Employment Allowance will be increased by £1,000 to £5,000 from April.

Sunak confirmed that the government will look to reform the R&D tax credits and will look to cut tax rates on business investment, with details to be announced at the Budget in Autumn.

 

To discuss how the Spring Statement may affect you call us on 01480 596636.

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