Rishi Sunak, The Chancellor of the Exchequer, made his annual Spring Statement yesterday, where he outlined the Government’s tax plan to support the UK economy, businesses and families.
With the ongoing conflict in Ukraine contributing to the rising cost of living, Sunak delivered his speech on the same day inflation figures revealed they had hit a 30 year high of 6.2%, with inflation forecast to average 7.4% throughout 2022.
The key measures the Chancellor announced included:
• The National Insurance levy remains in place, however the threshold will increase to £12,750
from 6 July 2022, aligning it with the equivalent income tax personal allowance which is set at £12,570 per annum
• UK GDP is expected to grow by 3.8% in 2022
• From April 2022, self-employed individuals with profits between the Small Profits Threshold (SPT) and the Lower Profit Limit will not pay Class 2 NICs, while allowing individuals to be able to continue to build National Insurance credits
• The Employment Allowance will be increased by £1,000 from 6 April 2022 to £5,000, which will benefit around 495,000 businesses
• An immediate reduction in duty on diesel and petrol from 6pm on 23 March 2022, by 5 pence per litre, for 12 months.
Looking further ahead, Sunak revealed the basic rate of income tax will be cut by 1p from 2024.
Kevin Parsons, managing director of Cooper Associates Accountants, said::
“The Chancellor confirmed he is proceeding with the much publicised increase in the National Insurance rate, starting in April 2022. However, he has now announced an increase to the NIC threshold in line with the personal tax allowance. This simplifies the tax system whereby all employees now know that they can earn up to £12,570 per year before any income tax and NI contributions are deducted from their salaries. Higher earners will still end up with higher National Insurance contributions, however this will be less than previously stated.”
Please contact Cooper Associates Accountants by calling 01823 218550 or email enquiry@caa-ltd.com if you would like further information or advice.
