Today the Chancellor Rishi Sunak delivered a Spring Statement amidst rising inflation and a struggling economy trying to recover from a pandemic.
If you are trying to decipher how it impacts upon you and your business, rest assured our Spring Statement Summary will be with you tomorrow morning. In the meantime, here are the key announcements that will bring the most significant changes for many of you:
Cost of Living Crisis
- Fuel duty will be cut by 5p a litre for a full 12-months, from 6pm on Wednesday.
- The Government will cut a 5% VAT rate to zero for households installing solar panels, heat pumps or insulation.
- The Chancellor has agreed to double the Government’s household support fund from £500m to £1bn.
- The planned 1.25-percentage-point rise in National Insurance contributions will remain to act as a ring-fenced funding source for health and social care.
- Within this plan, Chancellor Sunak announced that the National Insurance contributions threshold would be increased by £3,000 this year. This has been elevated from a planned rise of £300. The changes bring the National Insurance contributions threshold in line with the personal Income Tax allowance of £12,570. This equates to a potential £6bn personal tax cut for 30-million people — the largest single personal tax cut in 10 years.
- Chancellor Sunak stated that there would be a reform to the Research and Development Tax Credit System, stating that the adjustment would boost UK productivity.
- The Chancellor stipulated ‘…something is not currently working…’ in regards to UK investment in productivity, and the planned changes would lead to a reduction in tax rates on business investment at the Autumn Budget.
- The Government are increasing the employment allowance for small businesses to £5,000 — financial relief worth a potential £1,000. Half a million small businesses and employers could perhaps benefit from this change commencing April 2022.
- The Chancellor announced that the basic rate of Income Tax would be reduced from 20% to 19% in 2024 — the first cut in Income Tax for 16 years.