Skip to content
Satori Accounting

Spring Statement – what were the key tax announcements?

Energy Time Money Loop
The Spring Statement isn’t traditionally associated with significant tax changes, but there were some very important highlights from the 2022 version. What are the key points?

Income tax and NI

The Chancellor increased the threshold at which NI contributions are paid as was widely expected. The NI threshold will now be aligned with the tax personal allowance at £12,570 from 2022/23 for both Primary Class 1 and Class 4 NI. However, the increased rates for the year and the Health and Social Care Levy as previously announced in the Autumn Statement 2021 were not abolished.

Surprisingly, the change will not take effect until July 2022 which means that the first 13 weeks of the year will use the existing weekly and monthly thresholds, with the increase coming in July 2022.

For directors using an annual pay period, the Primary Class 1 allowance for the whole tax year will work out at £11,908. The threshold for paying Class 2 NI has been aligned with the Lower Profits Limit, i.e. £11,908 for 2022/23.

We expect this to be a tricky conversation piece as we try to navigate our clients though subtle changes to their net take home pay between June and July 2022, and we consider some tax planning points for limited company directors who may benefit from an increase in their salary from £9,880 to £12,570 per annuum, kicking in from 1 July 2022, but bearing in mind that Employers NIC thresholds have not been increased in the Spring Statement!

A little bit of good news for some small employers is that the Employment Allowance that offsets Secondary Class 1 NI will increase from £4,000 to £5,000. This will also come into effect from April 2022.

Finally, the Chancellor also announced that the income tax basic rate will fall from 20% to 19% from April 2024. This appears to be a move ahead of a general election around that time as opposed to genuine tax and economic measure.

VAT 

VAT on certain energy saving equipment has been cut from 5% to 0% for a period of five years. This includes thermal insulation and solar panels, and similar items. Fuel duty was also cut by 5p per litre, effective from 6pm on 23 March 2022. This cut will last for one year, subject to any extension.

This covers the main changes outlined in the Spring Statement. We will be in touch with clients affected over the new few months to put some tax planning points into action!
If you would like to talk to us about how the Spring Budget Statement impact you and your business book a discovery call with us today.

Related Posts