A ‘Give & Take' Budget?

Ahead of the Spring Statement last week, speculation centred around what the Chancellor might do in response to increasing financial pressure on families and businesses, and perhaps the announcements made were more low key than anticipated. Is there more to come? Quite possibly. On the whole, the announcements painted a picture of ‘give and take’ – here are the key updates:

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NATIONAL INSURANCE

Despite what many had thought, the Health and Social Care Levy is here to stay, coming into effect in the UK on 6^th April 2022.

What the Chancellor did announce was an alignment of the National Insurance threshold with the Income Tax personal allowance, meaning from July 2022 the income threshold at which point people start paying National Insurance will rise to £12,570. This brings a tax saving of £330 for employees, or £250 for a typical self-employed person.

Class 2 National Insurance Contribution (NICs) threshold for lower earning self-employed individuals also increases from April. Class 2 NICs on profits between the Small Profits Threshold (£6,725) and Lower Profits Limit will not be paid, but National Insurance credits will continue to be able to build up. This’ll benefit around half a million self-employed people by up to £165 a year.

 

FUEL DUTY

As of 6pm on 23^rd March, fuel duty was cut by 5p per litre. This is the biggest cut to fuel duty rates in decades which’ll last until March next year.

 

INCREASING THE EMPLOYMENT ALLOWANCE

The Employment Allowance, which gives relief to smaller businesses’ National Insurance payments, will increase from £4,000 to £5,000 from April.

 

BUSINESS RATES FOR gREEN TECHNOLOGY

The introduction of green reliefs (announced in Budget 2021) for eligible plant and machinery used in onsite renewable energy generation and storage, now take effect from April 2022, one year earlier than originally planned. Additionally, a 100% relief for eligible heat networks that have their own business rates bill are being brought forward from April 2023 to April 2022.

 

VAT ON INSTALLATION OF ENERGY SAVING MATERIALS

VAT on the installation of energy-saving materials will be reduced from 5% to 0% from 1^st  April 2022 until 31^st March 2027.  The additional eligibility conditions introduced in 2019 have been permanently removed.  The changes also bring the installation of wind and water turbines back into the scope of the relief.

 

 

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