The Chancellor, Rishi Sunak, gave his Spring Statement on 23 March 2022. This was against a backdrop of rising inflation (6.2% for the year to February 2022) and the impact on economies of the Russian attack on Ukraine.
This statement does not usually announce any tax changes, they are usually reserved for the Budget in Autumn, but against the current backdrop some were expected, and the Chancellor did not disappoint.
The key changes were as follows:
Fuel Duty cut
The amount of fuel duty was cut by 5p per litre from 6pm. This cut to last for 12 months. However, with pump prices increasing by over 50% in the last few months this will only be a minor saving.
National Insurance changes
The Chancellor has increased the point where National Insurance is paid by employees and the self employed to an annualised £12,570. This only takes effect from 6 July 2022, not 6 April 2022, so the full effect is delayed a little.
The threshold at which employers start to pay National Insurance has not been increased and will remain at £9,100.
The self-employed have a similar rise in the point at which they start to pay National Insurance. This rises from £9,880 to £11,908 for the tax year starting 6 April 2022. Rising to the full £12,570 from, 6 April 2023.
Employment allowance
This has been raised from £4,000 per year to £5,000 from 6 April 2022. This is a use it or lose it allowance for employers to set against Employers National Insurance. Sole-Director only payrolls do not qualify for this allowance.
Income Tax
The first reduction in Income Tax was announced for over 16 years. This cut is a long way in the future and will come in from 6 April 2024. This reduces the Basic Rate of income tax from 20% to 19%. This cut will only apply to earned and rental income and will exclude savings and dividends income.
Inflation
One of the most worrying comments made by the Chancellor was that he does not expect Inflation to be under control until 2024. Independent forecasts for expected average inflation for 2022 is 7.4%. In the UK, as with other countries, we are going to have to get used to the first significant inflation figures for many, many years.