Earlier today, Rishi Sunak unveiled his Spring Statement against a backdrop of rising fuel, energy and food costs.

Whilst The Spring Statement is predominantly an annual statement providing an update on the overall health of the economy, it generally lacks any new taxation measures. However, we felt that there were several announcements made today which you should be made aware of.

 

Despite the increasing cost of living, The Chancellor is pressing ahead with the introduction of ‘The Health and Social Care Levy’ from April 2022. Employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance from April 2022.

The same 1.25p in the pound increase will also apply to dividends from April 2022.

Despite the introduction of The Health and Social Care Levy, The Chancellor confirmed that he will be increasing the point at which people start paying National Insurance to £12,570 (currently £9,500) from July 2022. This increase applies to employee’s (Class 1 National Insurance) and The Self-Employed (Class 4 National Insurance). This now aligns the starting point for National Insurance with starting point for Income Tax.

The ‘Employment Allowance’ which gives relief for smaller businesses’ National Insurance payments will increase from £4,000 to £5,000 from April 2022. Essentially, this means that qualifying employers will not pay the first £5,000 of Employers National Insurance from April 2022.

 

We detail below the new National Minimum/Living Wage rates from April 2022:

	New Rate (From April 2022)	Current Rate (Since April 2021)	Percentage Increase
23 years old and over	£9.50	£8.91	6.6%
21-22 years old	£9.18	£8.36	9.8%
18-20 years old	£6.83	£6.56	4.1%
16-17 years old	£4.81	£4.62	4.1%
Apprentice Rate*	£4.81	£4.30	11.9%

*This rate is for apprentices under 19 or those in their first year. If the apprentice is 19 or over and past their first year, they will be entitled to the rate that applies to their age.

If LBW process payroll on your behalf, we will automatically uplift any employee’s on National Minimum/Living Wage to ensure all legislation is met.

 

• From 6pm this evening (23 March) fuel duty will be cut by 5p per litre for 12 months.
• The Chancellor has also reduced the VAT on energy saving materials such as solar panels, heating pumps and roof insulation from 5% to zero for five years, helping families become more energy-efficient.
• As previously announced, from April 2022, a 50% Business Rates Relief will take effect for eligible retail, hospitality and leisure properties.
• The temporary reduction in VAT for the hospitality and leisure sector will end on 31 March 2022.

Further commitments were made by The Chancellor today, including a pledge to decrease the basic rate of income tax to 19% from 2024 and a commitment to improve Research and Development reliefs. At this stage, these are pledges and we will comment on these in more detail as and when they further details are released.

 

As we have always maintained, with all matters referred to in the Chancellors announcements the “devil will be in the detail” and the full impact and understanding of all the announcements will not be made clear until the full parliamentary process has been undertaken and the proposals become law in the relevant finance act. We will issue further notices should any matters of significance be announced.

Last modified on Wednesday, 23 March 2022