Spring Statement 2022 – An Overview
Rishi Sunak today stood up and made his Spring Statement – there were more platitudes than outright headlines.
It was more interesting, however, to read between the lines. For instance, the Chancellor stated that current thinking is that average inflation for 2022 will be (a whopping) 7.4% (currently 6.2% at the end of February). He expects inflation to be back under control by 2024. That is all subject to the current crisis being resolved.
The Key Takeaways
- Fuel duty will be cut by 5p a litre from 6pm this evening. This will be for the next 12 months.
- For the next 5 years, VAT on insulation and green energy incentives such as solar panels and heat pumps will be reduced to nil.
- The threshold for charging NI will be aligned with the personal allowance for income tax. The Health & Care Levy will be retained. However, the view from the Treasury is that when these two items are combined, 70% of taxpayers will be better off.
- The Employment Allowance will be increased from £4K to £5K – this helps smaller businesses with their Employers’ NI contributions.
- No business rates from April 2022 for green technology to decarbonise buildings and eligible heat networks will receive a 100% relief. This is on top of help for the hospitality industry.
- The government has published a Tax Plan. This looks at three areas:
- Better training for staff and targeted tax relief.
- Ideas – how to make businesses more innovative and to structure tax reliefs accordingly.
- Tax reliefs for capital investment – to ensure the benefits arising from the current super deduction continue after this relief ceases.
- They are looking at ensuring that R&D tax credits are properly targeted and may apply to further areas of innovation.
- Apparently, the UK has lower than average spending on training, R&D (even though the current allowances are more generous than other countries) and capital investment. These are all felt to adversely impact growth in GDP compared with our near neighbours. The intention is to collaborate with businesses over the summer to capture their thoughts as to how best to tackle these issues and get the best return for the sums spent.
- Finally, the Chancellor intends in 2024 to reduce the basic rate of tax by 1% to 19%. This has only been possible twice in the last 20 years.
Overall, the Chancellor is currently keeping his powder dry due to all the current uncertainties.
The Spring Statement Tax Plan can be found here.
If you have any questions regarding the contents of this Bulletin or the Spring Statement 2022 in general, please contact:
M: +44 07983 927096
T: +44 020 7242 5000