Rishi Sunak, Chancellor of the Exchequer

Contents

  1. 1. Spring Statement 2022: At a glance
  2. 2. Fuel duty reduced by 5p per litre
  3. 3. 0% VAT on energy saving household purchases
  4. 4. National Insurance stays at 1.25%, but threshold set to increase
  5. 5. Employment Allowance increase to £5,000
  6. 6. Income Tax cut from 20% to 19%
  7. 7. 50% Business Rates Relief on up to £110,000

Read Time: 4 minutes

Spring Statement 2022: The Highlights

March 29, 2022
With fuel, food and energy prices on the rise and inflation forecast to reach 8% in the next few months, the 2022 Spring Statement was defined by the Chancellor’s plans to tackle what has been dubbed the “cost of living crisis”.Delivered by the Chancellor, Rishi Sunak, in an address to Parliament on 23rd March 2022, the Statement announced both immediate and long-term tax changes to buffer the impact rising prices would have on individuals and businesses.With a lot of these measures coming into place in the new tax year, we’ll be taking a look at the highlights from the statement and what they could mean for your small business.

Spring Statement 2022: At a glance

Short on time? Here's a quick breakdown of the key points:
    Fuel duty has been reduced by 5p per litre, saving the average car driver up to £100 on fuelVAT on household upgrades designed to make homes more energy-efficient will be slashed from 5% to 0%The threshold for Class 1 National Insurance rates will increase to £12,570, while sole traders paying Class 2 and Class 4 National Insurance will see thresholds increased to £11,908 and £12,570 respectivelyEmployment Allowance has been increased to £5,000Income Tax for Basic Rate taxpayers has been cut from 20% to 19%Business Rates Relief is set at 50% for businesses with a rateable value of up to £110,000

Fuel duty reduced by 5p per litre

At the time of writing this one’s already come into effect, so if you’ve been needing to fill up your tank you can rest assured you’re paying less tax on it.
For only the second time in 20 years, fuel duty was cut by 5p a litre for a whole year, starting from 6pm on 23rd March 2022. The cut — worth £5bn — is, according to HMRC, expected to save the average car driver £100, the average van driver £200 and the average haulier up to £1500.

0% VAT on energy saving household purchases

If you’re looking to make your house more energy-efficient, this tax announcement is for you. Starting from April 2022, the VAT on household upgrades designed to promote energy-efficiency — such as insulation, solar panels and wind turbines — is to be dropped from 5% to 0% up until 2027. Not only does better insulation mean cheaper energy bills, but it’s also a big plus for the planet, too.

National Insurance stays at 1.25%, but threshold set to increase

Designed to Health and Social Care Levy introduced back in September 2021 is set to stay, meaning both employers and employees will be paying 1.25% more in National Insurance contributions (NICs) from the start of the 2022/23 tax year (6th April 2022).

To soften the blow this has to employee pay packets, from July 2022 the primary NIC threshold will increase by £3,000, meaning those paying Class 1 NICs can earn up to £12,570 without paying any National Insurance.
For sole traders, the National Insurance contributions thresholds look a little different. From April 2022, the starting threshold for paying Class 2 National Insurance contributions increases to £11,908, while the threshold to start paying Class 4 NICs will rise to £12,570 from July 2022.

Employment Allowance increase to £5,000

Employment Allowance is set to increase to £5,000 from April 2022, giving around half a mission small businesses a tax cut of up to £1,000.Businesses eligible to claim Employment Allowance can cut down their National Insurance bills using the allowance at their disposal. For the 2022/23 tax year, this is equivalent to an employer hiring four new full-time employees on National Living Wage (NWL) before having to pay employer National Insurance contributions, slashing employer tax bills for up to 670,000 businesses.

Income Tax cut from 20% to 19%

This one’s quite a bit further away than the announcements listed above, but as the first cut in Income Tax for 16 years it’s definitely worth a mention.

Due to be in place by 2024, this tax cut is equivalent to around £5bn a year and means Basic Rate taxpayers — those earning between £12,571 – £50,270 — can hang onto more of their money.

50% Business Rates Relief on up to £110,000

In a bid to give businesses in retail, hospitality and leisure a boost, the Chancellor announced a temporary 50% Business Rates Relief worth £1.7bn on businesses with a rateable value of up to £110,000 over the next five years. To put this into context, a cinema with a rateable value of £95,000 will save £24,000 through the Business Rates Relief.
Cam Finney
Cam FinneyHead of CX

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