We hope you weren’t holding your breath for a Big Announcement in Mr Sunak’s Spring Statement yesterday.
National Insurance
The threshold at which National Insurance Contributions (NICs) start to be payable has finally been aligned with the income tax personal allowance, thus fulfilling what the Government has long described as its ‘ultimate ambition’.
If you are an employee on £40,000 a year, this more or less exactly compensates you for the 1.25% ‘health and social care’ increase in National Insurance (which remains in place), leaving you no better and no worse off than you are now. If you’re on less than this, you are a net beneficiary: if you are on more than this, it reduces the pain of the NIC increase but doesn’t remove it altogether.
If you are an employee on £40,000 a year, this more or less exactly compensates you for the 1.25% ‘health and social care’ increase in National Insurance (which remains in place), leaving you no better and no worse off than you are now. If you’re on less than this, you are a net beneficiary: if you are on more than this, it reduces the pain of the NIC increase but doesn’t remove it altogether.
Two points:
- First, the threshold increase does nothing to mitigate the 1.25% uplift in the employer’s rate of contribution (though if as an employer you are eligible to reduce your NIC cost by claiming Employment Allowance, the maximum you can claim is increased from £4,000 to £5,000 from April).
- Second, the threshold increase doesn’t come in until July: so (except for the very lowest earners) net income drops for the first three months of the year before increasing again in July.
VAT, fuel duty, income tax
From 1 April 2022 VAT is reduced to zero on the supply and installation of specified energy-saving materials in residential accommodation. These include not only insulation but also things such as solar panels, heat pumps and biomass boilers.
Fuel duty on petrol and diesel is reduced by 5p per litre for the next twelve months.
And the basic rate of income tax might be cut to 19% from 2024. We’d advise against holding your breath on that one.
That’s it.
We have more detail from the Chancellor’s Spring Statement 2022 speech here.