Spring Statement 2022

Talk to our team

23 March 2022

Spring statement 2022 announcements

Find out what the main announcements were from the Spring Statement 2022 that will affect businesses.

The Spring Statement isn’t intended to be used to launch significant new tax related announcements, but the Chancellor did set out three areas that his overall ‘Tax Plan’ would cover, with help for individuals, creating conditions for higher growth and sharing the proceeds of growth.

As expected, the Chancellor delayed much of these 'Tax Plan' announcements until the Autumn Budget, meaning businesses will have to sit tight and wait until then for more clarity.

Today's main announcements were:

Fuel duty

As expected, the Chancellor announced a cut in fuel duty by 5p per litre. This cut will take effect from 6 p.m. tonight and will be extended until March 2023. This will help a lot of business sectors that rely on transport and have high fuel costs.

Business rates

There was an announcement of a new temporary business rates relief of 50% on business rates for the retail, hospitality & leisure industry. Whilst this is great news for this sector, what businesses really need longer term is a complete overhaul of the business rates system.

Energy efficiency

Good news for businesses in the energy efficiency market, as the Chancellor announced a zero percent VAT rate on a wider range of energy efficient goods for homeowners. This zero rate will now apply to solar panels, heat pumps, insulation, water turbines, and wind turbines. (This won’t currently apply in Northern Ireland).

National insurance

Today’s surprise announcement for individuals was a larger than expected increase in NIC thresholds from July 2022. The employee primary threshold and the self-employed lower profits limit will increase from £9,880 to £12,570. This means the NIC threshold and income tax thresholds will be aligned.

Help was given to small businesses with the Employment Allowance being increased from April to £5,000. This will create a tax cut for half a million small businesses.

Self-employed individuals with profits between £6,725 and £11,908 will not need to pay Class 2 NICs from April 2022. However, they will still be able to access entitlements to contributory benefits. This will equate to a saving of £165 per year.

Capital Allowances: Annual Investment Allowance (AIA) & Super-deduction

A reminder that the temporary £1 million level of the Annual Investment Allowance has been extended to 31^st March 2023 and the super-deduction will also end on 31^st March 2023. Once the super-deduction ends next year, the overall tax treatment for capital investment will be far less generous than other advanced economies and the Chancellor said he would consider this in the Autumn Budget.

With corporation tax rising to 25% from April 2023 and announcements to be made in the Autumn Budget, it’s worth seeking advice around capital expenditure to make the right choices.

Income tax

An income tax reduction from 20% to 19% was announced today that will potentially come into effect in April 2024. This isn’t a guaranteed cut as the Chancellor did say it would be dependent on certain fiscal criteria being met.

Future tax reduction and reform

As expected, the Chancellor didn’t announce any big tax news for businesses in his Spring Statement. But he did set out his ‘Tax Plan’ for reducing and reforming tax in the Autumn Budget. The areas that are being considered are:

PEOPLE – with UK companies only spending half the European average on training for employees, the Chancellor will be looking to give additional help and incentives for companies to invest in training.

IDEAS – With UK businesses R&D spending on R&D as a percentage of GDP is less than half the OECD average, the Chancellor believes that R&D reform is needed. The Autumn Budget will look at R&D tax credits reform to include areas such as data, cloud technology and pure maths.

CAPITAL – Measures to cut tax rates on business investment.

None of these measures have been announced today and businesses will have to wait for further details to be announced in the Autumn Budget.

These are unprecedented times with Covid, Brexit and the war in Ukraine and because of this it’s incredibly difficult to predict future measures. Whilst we understand why the Chancellor is being cautious, we would have liked to have seen more measures to help businesses in a time of high inflationary costs and unpredictability. We await the Autumn Budget with the hope that more measures in the ‘Tax Plan’ to help businesses will be announced and we’ll update you of those changes when they happen.