The Spring Budget 2022, otherwise known as The Spring Statement, was delivered today (23rd March 2022), by the Chancellor Rishi Sunak.
The Spring budget is typically seen as a ‘mini budget’, however given the current cost of living crisis, with rising oil and gas prices, a 30 year high in inflation of 6.2% and an impending National Insurance rate increase of 1.25% deemed, the health and care levy, this years’ Spring Budget could not be more important.
Below, we’ve summarised major announcements that will affect the average person and business, like me and you:
- From July 2022, the National Insurance primary threshold and lower profits limit increase from £9,880 to £12,570 aligning with the personal tax allowance. – Directors; time to up those salaries from July 2022!
- From April 2022, self-employed individual with profits between the Small Profits threshold and the lower profits limit, continue to earn National Insurance tax credits, but not pay any Class 2 National Insurance.
- The anticipated 1.25% National Insurance Increase (Health and Care Levy) is to remain.
- 5p cut in fuel duty for 12 months.
- From April 2024, income tax is to be reduced from 20%, to 19%, lining itself with corporation tax.
- Employer allowance to increase from £4,000 to £5,000 per annum from April 2022.
- Temporary increase in the Annual Investment allowance from £200,000 to £1 Million.
- Eligible retail, hospitality, and leisure businesses benefit from a new temporary 50% Business Rates.
- VAT 5% deduction on renewable energy materials.
- Structures and Buildings Allowance; allowing businesses to deduct 3% a year of the cost of construction and renovation of non-residential structures and buildings
- Further details can be found: https://www.gov.uk/government/publications/spring-statement-2022-documents
Whilst here at the AME office, we do appreciate the Spring Statement is normally considered the ‘mini budget’, it couldn’t have come at a more important time.
We welcome the increase the National Insurance threshold and the increase in the employer’s national insurance threshold. We also welcome the 5p cut in fuel duty as well. Such a cut will undoubtedly help thousands of employees, business owners and more, up and down the country.
Unfortunately, however, we do not think this goes far enough. With the Health and Social Care levy still in place, many basic rate tax payers will still be worse off, despite the National Insurance threshold increase. In addition, with Inflation at a 30 year high, the cost of living will still outweigh the savings made in National Insurance Contributions.
Here at the AME office, we would also welcome more business-friendly initiatives at an SME level. We welcome a push in R&D credits and Annual Investment Allowances, but see it more for the established cash rich company of certain industries, rather than those fresh new start-ups for all, we come to love.
All in all, this statement has been somewhat underwhelming, however, the increase in National Insurance threshold will give a small sigh of relief to many around the country.
For more on this, or anything else, do not hesitate to contact us for a free consultation.