The Spring Statement was not meant to be a March mini-Budget, despite what many headlines in the days before suggested. Mr Sunak’s aspirations for a once-a-year budget were disappointed for the third year running when he made his Spring Statement on Wednesday 23rd March.
As inflation reached 6.2%, the Chancellor announced a variety of tax cuts aimed at countering the cost of living crisis
- There will be a temporary 12-month cut to duty on petrol and diesel of 5p per litre from 23 March 2022.
- VAT relief for the installation of energy saving materials (ESMs) will be extended and there will be a time-limited zero rate for the installation of ESMs.
- The primary threshold for Class 1 national insurance contributions (NICs) will increase from £9,880 a year to £12,570 a year from 6 July 2022, bringing it in line with the frozen personal allowance.
- For company directors, who are subject to special rules, the equivalent annual amount from July will be £11,908. From 2023/24, all employees will share the same £12,570 annual threshold. The maximum potential Class 1 employee NICs saving in 2022/23 is £269.
- For the self-employed, the lower profits limit will increase from £9,880 to £11,908 in 2022/23, rising to £12,570 in 2023/24. Class 2 NICs will not be payable if profits are below these limits. The maximum potential Class 4 NICs saving in 2022/23 is £208.
- The employment allowance will be increased to £5,000 from April 2022.
- As part of the reform of research and development tax reliefs, from April 2023, all cloud computing costs associated with R&D, including storage, will qualify for relief. Furthermore, some expenditure on overseas R&D activities will still be able to qualify, for example, clinical trials that cannot be conducted in UK.
At the end of his speech, in an unusual pre-Budget unveiling of a specific tax move, the Chancellor announced that the basic rate of income tax will be cut from 20% to 19% from April 2024 for taxpayers in England, Wales and Northern Ireland.
This content is for information only. It does not represent advice or a recommendation and should not be interpreted as such. The guide represents our understanding of the law and HM Revenue & Customs practice as at 23 March 2022, which are subject to change
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