What did the Chancellor say and what did it actually mean?
On Wednesday 23 March, Rishi Sunak delivered the Spring Statement 2022 against a backdrop of a growing cost of living crisis and significant economic uncertainties.
So, what exactly did the Chancellor say and, more importantly, what did it actually mean?
As part of Spring Statement 2022, the Chancellor set out the government’s Tax Plan. This three part plan is being proposed to help families with the cost of living, support growth in the economy, and ensure the proceeds of growth are shared fairly.
The Spring Statement enacts the first part of the plan with measures outlined alongside those previously announced, to help households and support businesses affected by rising costs.
Key announcements:
- A temporary 12 month cut to fuel duty on petrol and diesel of 5p per litre in March 2022
- An Increase of the Employment Allowance to £5,000 in April 2022
- An Increase to the annual National Insurance Primary Threshold and Lower Profit Limit to £12,570 in July 2022, to align with the income tax personal allowance
- Reduction in the basic rate of income tax to 19% from April 2024
- Bringing forward business rates relief for green technology
- Reform of R&D tax credits to help drive innovation
- Expansion to the scope of VAT relief for householders who want to improve energy efficiency
National Insurance Contributions (NICs):
Despite lobbying to delay the upcoming 1.25% increase in NICs payable by employees, employers and the self-employed, the government has decided to go ahead as planned from April 2022, to provide additional funds for health and social care
VAT Rates in the Leisure and Hospitality Sector:
No extension has been granted to the leisure and hospitality sector for use of the reduced 12.5% VAT rate on eligible supplies including food, non-alcoholic beverages and hotel and holiday accommodation. The VAT rate applied to these supplies will revert to 20% from 1 April 2022 as planned.