Following the Chancellor’s Spring Statement, we’ve broken down some of the key points to make them more digestible. We will continue to update this page as more guidance is released.

  1. Fuel Duty

There is now officially a temporary 5p fuel tax cut that will continue until March 2023. This will relieve motorists a little when filling up their tanks, by between £1 and £3 per full tank. This is the biggest cut ever according to the Treasury.

Visit the UK Government website for updated information.

 

  1. 0% VAT on home energy efficiency

Homeowners installing energy-efficient measures to their homes, such as solar panels, heat pumps, or insulation, will not have to pay VAT. This will be a benefit in the future to those

Visit the UK Government website for updated information.

 

  1. 50% discount on business rates

In April, there will be a temporary business rates discount for retail, hospitality and leisure of 50%, effective from April. A typical pub would save £5,000.

It was also announced that the business rates multiplier would be frozen in 2022/23 – a tax cut for all ratepayers worth £4.6 billion over the next 5 years.

Visit the UK Government website for updated information.

 

  1. An increase on the Employment Allowance

The Employment Allowance, a relief which allows smaller businesses to reduce their employers National Insurance contributions bills each year, will increase from £4,000 to £5,000. Eligible businesses and charities will be able to claim a greater reduction on their secondary Class 1 National Insurance liabilities and, from the 2023 to 2024 tax year onwards, their Health and Social Care Levy liabilities.

Visit the UK Government website for updated information.

 

  1. A rise in the National Insurance threshold

Employees National Insurance threshold will be £12,570 – an increase of £3,000. Any earnings for an employee up to £12,570 will be completely tax and National Insurance free. This is an equivalent saving of £330 a year for all employees and will take effect from 6th July 2022.

Self-employed National Insurance (Class 4) threshold will increase to £11,900 for 2022/23.

The National Insurance contributions (tax on income) will rise by 1.25%. To mitigate this, the Chancellor has changed the threshold at which you start paying it.

So where does this even out?

Earnings from over £9,600 up to £35,000 will not pay any more (or will pay less if you are on the lower end of that pay scale) with the new threshold. If you earn more than £35,000 the 1.25% increase outweighs the starting threshold so you will have to pay more NI.

The breakeven point is around £35,000. If you’re under that, it’s a gain. If you’re over that, then the two measures equal a loss for you.

To find out what you may be saving or losing, we can send you a Croner-I NICs comparison calculator for 2022/23. Simply get in touch via email, or social media, and we can send it over to you.

Visit the UK Government website for updated information.

 

  1. Dividend Rate increase

The dividend rate will permanently increase by 1.25% on all current rates for of April 2022 as part of a package of measures to fund the costs of social care and the NHS.

Visit the UK Government website for updated information.

 

The Chancellor also went over some of the measures that will be announced in the autumn budget. These include the following:

 

  1. R&D incentives increase

Research and Development incentives will increase from autumn. This means more training incentives for employers to innovate, expanding on the current apprenticeship scheme.

 

  1. Further reliefs for companies making investments in their business

This is a series of new policies that will make it more attractive for businesses to focus on productivity growth after the super-deduction, giving 130% tax relief, ends in April 2023.

 

  1. Basic rate of income tax cut

The basic rate of income tax will be cut from 20p to 19p in the pound, before the end of 2024 (the end of this Parliament).

This tax rate is currently paid on earnings between £12,571 and £50,270 a year. The cut means someone earning £25,000 a year will pay roughly £125 a year less in income tax.

It has been confirmed that there is no change to the 40% and 45% income tax rate for higher earners.

 

Keep an eye on this page for more updates.

 

Additional sources:

www.gov.uk and www.moneysavingexpert.com

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