Posted on: 23 March 2022
2022 Spring Statement
On 23rd March 2022, Chancellor Rishi Sunak announced the Spring Statement, this provides insight on how the government is going to tackle rising inflation while supporting businesses and households. The Chancellor also touched on the invasion in Ukraine, detailing the sanctions in place but prompted that it will affect the UK’s economy with further increases in inflation expected in the coming months.
During this Statement Mr. Sunak detailed the public pressure to ease the rising cost of living. He explained that the hike in National Insurance contributions by 1.25% is needed to fund the NHS to recovery post-pandemic, and instead focused on cutting taxes to help households.
He mentioned that even as we emerge from the pandemic our inflation rate hit a 30-year high rising to 6.2% in February which is said to be lower compared to that of the USA and other economies. The Office for Budget Responsibility (OBR) predicts that the UK GDP will grow by 3.8% in 2022, lower than previously forecast.
How is it different from the main budget announcement?
This Statement is viewed as a mini budget which lays the foundation for the year and provides updates on where the economy is headed. This year, Mr. Sunak took the opportunity to outline his new policies to help the UK economy grow through new tax measures.
What are the key announcements for businesses
The Chancellor announced an immediate 5p per litre cut to fuel duty until March 2023. This change is estimated to save an average van driver £200 and the average haulier £1,500.
Within the Spring Statement, details were laid out for the threshold for paying National Insurance (NI) to increase by £3,000. This means that people will need to earn more than £12,570 to pay NI from April 2022. It equates to a tax cut of £300 per worker.
For the first time in 16 years, a tax cut has been announced. The basic rate of income tax will be cut to 19p in the pound from the current rate of 20%. This will come into effect from 2024.
There will be an increase in the employment allowance for small businesses from £4,000 to £5,000 which will equate to a tax cut of £1,000 for half a million small businesses.
Mr. Sunak aims to help small and medium-sized enterprises (SMEs) by providing them with subsidised high quality training options for their employees. Schemes outlined included The Help to Grow: Management scheme and Help to Grow: Digital, for the adoption of digital technologies.
Other important updates
Green technology, including solar panels and heat pumps, will be exempt from business rates from April 2022. This is estimated to be worth around £170 million over the next five years to support the decarbonisation of business buildings.
For the next 5 years households will not pay Value Added Tax (VAT) on installing any energy saving materials. This is a move to promote using energy saving materials which has a lower carbon footprint while keeping the heating bills down.
Vulnerable households will benefit from a £1 billion support fund which is double the amount of the previous fund. This will come into effect from April 2022.
From April 2023, businesses will be able to claim relief on the storage of their vital data and pure math research. Draft legislation will be published this summer.
Business insurance with Premierline
It is important to make sure that you have the right insurance in place to protect the business that you have built. Every business is different and has its own business insurance needs, which is why we work with some of the UK’s most well-known insurers to ensure that you are getting the right insurance cover for your business.
The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.