Spring Budget 2022: What You Need To Know

With the crisis in cost of living and the issue of inflation being a major concern for small and large firms there was a lot of curiosity about what Rishi Sunak would reveal in the Spring budget statement. In the past, the Spring statement has primarily focused on updating how to improve the UK economy. There was also the belief that there would be a chance for the chancellor would issue some tax announcements that were needed to assist the UK to cope with the current increase in the rate of inflation that is expected to reach 8% by the end of this year. Bank of England expects to rise to 8% by the end of this spring.

There weren't a lot of announcements however there were a few important aspects that could benefit the majority of employees, self-employed and small-sized enterprises, such as the raising of the National Insurance threshold and the increasing of the Employment Allowance.

As accountants for contractors are, we're looking at some of the most important announcements below:

National Insurance

The tax-free allowance individuals get before they pay National Insurance will increase by approximately PS3,000, bringing the tax-free amount up to PS12,570 which is in line with an individual allowance. This is a relief for many who are affected by the hike on National Insurance. National Insurance rate of 1.25 percent, which is not yet complete and means that many people will have lower National Insurance contributions next tax year.

Employment Allowance

The allowance for employment is a benefit for employers with employees who are eligible. The first PS4,000 employers NI is not due since it is covered under this allowance. The chancellor has announced that it will be raised to PS5,000 by April 2022. This will provide an additional tax benefit for small-sized businesses that have employees.

Fuel Duty

The cost of energy and fuel continues to rise over the last few months, there was demands on the Government to offer some help. While there was some displeasure that there was not more done to lower the cost of energy There was some assistance for motorists thanks to the Chancellor's announcement that fuel duty would be reduced by 5p per litre from now on.

VAT on improvements to energy efficiency

In an attempt to help reduce the cost of energy costs the Chancellor gave out the chance to reduce the cost of energy efficient upgrades. This will reduce the VAT rate from 5% down to 0 percentage for installing solar panels as well as heat pumps, and also home insulation.

Income Tax

In a surprising announcement, it was announced that the standard percentage of the income tax would be cut from 20 percent to 19 percent. This tax cut is appreciated by individual taxpayers, however it will take the tax system in April 2024.

We at Sherwin Currid Accountancy we are able to assist you in understanding the Budget and what it can mean for your business. So please do not be afraid to contact us to us now on 0800 135 7157 to find out more.