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Scott Brown ● Mar 23, 2022
Spring Statement 2022: What you need to know
Chancellor Rishi Sunak has presented the Spring Statement with the aim for a “stronger and more secure economy for the UK.” While this is not a budget but more a forecast to what will happen, there were some tax changes that will help individuals and businesses going forward. Read on to find out what was covered in the speech.
Scott Brown ● Mar 23, 2022
The economy and fiscal forecasts
- The economy’s growth expectation has been revised down to 3.8% in 2022 and is then expected to increase by 1.8% in 2023, 2.1% in 2024, 1.8% in 2025 and 1.7% in 2026.
- Inflation has risen at a faster rate than originally forecast, reaching 6.2% in February and expected to average at 7.4% for 2022.
- Debt is predicted to be at 83.5% of GDP in 2022/23 and fall to 79.8% in 2026/27.
- Unemployment is currently at 3.9% which is lower than predicted and forecast to reduce each year going forward.
Taxes and duties
- The increase of 1.25% in National Insurance (both employee and employer) as well as in the Dividend Tax rates, which have been confirmed, will happen from 6 April 2022.
- Fuel duty will be cut by 5p per litre until March 2023.
- From April 2022, the Employment Allowance will increase from £4,000 to £5,000 per year, meaning an additional saving for businesses that employ staff.
- From July 2022, the National Insurance threshold for employees will be increased so that it matches the Personal Allowance of £12,570. This is the threshold where employees start to pay tax.
- While business rates will continue, from April 2022 there will be a 50% business rates relief for companies in the retail, hospitality and leisure sectors over the next five years.
- The Annual Investment Allowance (AIA) of £1 million will be extended to March 2023.
- VAT will be reduced to zero for five years on energy efficient measures such as solar panels, heat pumps or insulations.
- By 2024 the basic rate of income tax will be cut from 20% to 19%