Against the backdrop of the war in Ukraine and the worsening cost of living crisis, the Chancellor’s Spring Statement last week contained a number of tax measures. However despite the ongoing difficulties being experienced by the hospitality sector, there was no announcement on the special rate of VAT for the sector which is expected to revert to its usual 20 percent rate later this week on 1 April 2022 from the current rate of 12.5 percent. Read the Institute’s Press Release reacting to the Spring Statement.
Key tax measures announced last week were as follows:
- an increase to the National Insurance Contributions (“NICs”) Primary Threshold for Class 1 NICs and the Lower Profits Limit for Class 4 NICs from £9,880 in 2022/23 to £12,570 from 6 July 2022 (note that the 1.25 percent increase in the rates of NICs from 6 April 2022 is unchanged);
- from 6 April 2022, self-employed individuals with profits between the Small Profits Threshold (£6,725 for 2022/23) and the Lower Profits Limit will not pay Class 2 NICs, however such individuals will be able to continue to build National Insurance credits for the purposes of contributory state benefits;
- the Employment Allowance will increase by £1,000 from 6 April 2022 to £5,000;
- from 6pm on 23 March 2022, a 5 pence per litre reduction in duty on diesel and petrol which will remain in place until 31 March 2023;
- VAT zero rating on the installation of energy saving materials until 31 March 2027 in Great Britain (excluding Northern Ireland because the region follows EU VAT rules on goods) which is a reduction from the current 5 percent rate;
- a reduction in the basic rate of income tax from 20 percent to 19 percent from April 2024; and
- from April 2023, reforming capital allowances and R&D tax relief (no further information is available at present on this aspect).
More information on some of the above is available in the various publications below:
The Spring Statement announcements which impact in 2022/23 are just some of the changes taking effect in the new tax and financial year; we’ll be summarising other changes worthy of mention in next week’s Chartered Accountants Tax News.