Spring Statement March 2022

25th March 2022 Debbie

The spring statement was made on 24 March 2022 by the Chancellor, Rishi Sunak.

The main parts of his speech were:

1% reduction in the basic rate of income tax – to bring this to 19% from April 2024.
- This will obviously affect gift aid for charities, as the amount added will be 1% less;
- Similarly, the amount added to personal pension contributions will be reduced.
Fuel is to be cut by 5p per litre from 25 March 2022, for 12 months;
VAT on energy saving materials is to be cut from 5% to 0% for the period 1 April 2022 to 31 March 2027;
There will be consultation and changes to the Research and Development tax regime;
There will be a review of the Capital Allowances tax regime to provide greater tax relief;
Business rate relief for eligible plant and machinery used on site in renewal energy generation and low carbon heat networks will be introduced a year earlier and be available from April 2022; and
Changes to the NIC regime:

Employees – From 6 July 2022 (so that payroll software providers have time to amend their software), the primary threshold for class 1 employees NIC will be aligned with the income tax personal allowance of £12,570 – so becomes £242 per week – from £190 per week from 5 April 2022 (having been £183 per week for 2021-22). The lower earnings limit will remain the same as previously announced for 2022-23 of £123 per week. Employees will continue to pay 0% on weekly earnings between the lower earnings limit and primary threshold. Employees earning between these bands, although paying no NI, will still build up credits for state pension and contributory benefits.

The employment allowance becomes £5,000 for 2022-23.

Self-employed – For 2022-23, class 4 NIC lower profits limit will be increased to £11,908 (to be line with the limits above) from April 2023 the lower profits limit will be £12,570. From 6 April 2022, self employed individuals with profits between the small profits threshold and the class 4 lower earnings limit will build up national insurance credits towards the state pension and other contributory benefits, but will not pay any class 2 NIC. Those earning above the class 4 lower profits limit will pay class 2 NIC, as well as class 4 NIC.