The Chancellor today announced his much anticipated spring statement with many people’s focus being on how this will help with the current cost of living crisis particularly with inflation rising to 6.2% and forecast to go higher later in the year.
The headline grabbing announcements was the 5p cut in fuel duty which took effect from 6pm Wednesday evening. This should result in a cut of nearer 6p per litre when the VAT on the fuel duty is also taken in to account and the reduction will be welcomed by motorists and the haulage industry. However, it only puts prices back to where they were around 7 days ago.
Income Tax and National Insurance thresholds are being aligned from July of this year which means individuals will not pay any National Insurance until their income exceeds the annual personal allowance of £12,570 per annum. The Chancellor’s other headline announcement as that basic rate income tax will be cut from 20% to 19% from April 2024.
Today’s announcements have an element of playing it safe rather that doing anything radical. Businesses will be disappointed with the lack of any announcements giving certainty on tax allowances although further announcements were promised for the Autumn budget. An increase in the Employment Allowance to £5,000 for smaller businesses effective in just two weeks will result in an additional £1,000 saving each year.
The Chancellor announced that the increase to employers’ and employees’ National Insurance of 1.25% will go ahead in April of this year. The aligning of the National Insurance and Income Tax personal allowance will reduce the amount of NI paid by individuals earning up to £34,000 per annum.
It was a very safe statement with very little given away and many businesses will be disappointed by the lack of any immediate targeted support for them. It is however hoped that the tax plan referred to by the Chancellor which will boost investment, innovation and growth, and to be announced properly in the Autumn budget, will bring the much needed incentives to encourage business to thrive in the future.
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Published February 2022 – please do not rely on this document alone and seek advice to take into account your own circumstances