Spring Statement … and a new tax plan
The Chancellor of the Exchequer, Rishi Sunak, delivered the Spring Statement yesterday (23 March).
As well as giving the nation an update on the health of the economy, the Chancellor set out the details of various tax changes to be introduced, some immediately and others to follow. The Spring Statement is couched in a “Tax Plan” (SS_Tax_Plan.pdf (publishing.service.gov.uk) billed as the Chancellor’s vision for a lower tax economy.
Described by the Chancellor as “the biggest net cut in personal taxes in over a quarter of a century”, the Tax Plan is divided into three categories: cost of living; capital, people and ideas; and growth. Overall, the Chancellor has announced a number of cuts, mainly to personal taxes, but also to a number of taxes affecting small businesses. There are also measures to help individuals combat the increasing cost of living.
The second part of the Tax Plan deals with “capital, people and ideas” and is aimed at boosting growth and productivity. Initiatives in this regard are to be announced in the Autumn Statement and include reforming and expanding R&D tax credits, cutting tax rates on business investment and incentivising training programmes. More detail on these changes should be available in the coming months when the consultation is published.
See our tables below for a quick overview of the changes announced.
Cost of living
| Date active from | Tax/Relief | Change |
|---|---|---|
| 6 July 2022 | National Insurance | Increase in annual primary threshold and lower profits limit from £9,880 to £12,570. |
| 23 March 2022, 6pm | Fuel duty | 5p reduction per litre. |
| April 2022 | Employment allowance for employers' Class 1 National Insurance liabilities | Increased from £4,000 to £5,000. |
| 1 Jan 2022 | Annual investment allowance | The temporary £1 million level has been extended to 31 March 2023. |
| April 2022 | VAT | VAT relief on the installation of energy saving materials extended to include additional technologies and remove complex eligibility conditions. The installation of energy saving materials will also be zero-rated for VAT for the next five years. |
| April 2022 | Business rates | Retail, hospitality and leisure businesses will be granted a temporary 50% relief from business rates. More generally, the business rates multiplier will be frozen in 2022-23 and is expected to offer effective tax cuts over the next five years. There are also business rates exemptions being introduced for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bills. |
Sharing growth
| Date active from | Tax/Relief | Change |
|---|---|---|
| April 2024 | Income Tax | Reduction in basic rate from 20% to 19%. |
If you have any queries on how these changes will affect you, or you are in need of tax advice more generally, please contact Cathy Bryant.
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