The Chancellor, Rishi Sunak, delivered the UK Spring Statement on 23rd March 2022. What do small businesses need to know about the announcements?
Coronavirus Pandemic Response
From April 2022 taxpayers will begin to pay for the significant costs associated with the Government’s pandemic response. These include:
- An increase in National Insurance by 1.25% to pay for health & social care
- An equal increase in dvidiend tax of 1.25%
- A ‘stealth tax’ in the form of a personal allowance freeze, which keeps the amount you can earn tax-free frozen at £12,570 until 2026.
But amid the increases there were some reliefs, to soften the blow!
NIC will increase by 1.25% from 6th April, before being replaced by the Health and Social Care Levy next year.
However the NI thresholds were raised, which means that you need to be earning more before you start paying National Insurance contributions.
The primary threshold for Class 1 NICs and the lower profits limit for Class 4 NICs will increase from £9,880 to £12,570 in July 2022.
Self-employed people with lower earnings will also benefit. If you have profits between the small profits threshold (£6,725 in 2022-23) and the lower profits limit, you’ll build up National Insurance credits but won’t need to pay Class 2 NICs.
For employer’s there was some good news with the announcement that the annual Employment Allowance would be increased to £5,000 from April 2022.
A cut of 5p per litre in fuel duty is one of the headlines from the Budget speech, however it’s likely to make little impact on the price of filling your fuel tank.
Homeowners will pay 0% VAT to install energy saving products, like solar panels or heat pumps, for the next five years.
Income Tax reductions for the future
By 2024 it is expected that the basic rate of income tax will drop from 20% to 19%.
For the full Budget Report 2021 visit Budget documents.
Or to discuss how the Budget Report 2022 will impact you and your business give us a call on 01737 652 852.