Spring Statement 2022 – Tax Update

Changes to National Insurance Contributions

The biggest headline in the Spring Statement 2022 is an increase in the National Insurance Contribution (NIC) threshold for workers to £12,570 which will come into force in July 2022.

This change affects the Primary Threshold and Lower Profits Limit and will therefore reduce NICs payable by employees and self-employed workers on their earnings.

The new threshold is in line with the personal allowance meaning that a worker earning £12,570 or less will not pay any income tax or NICs.

For employers there is no change in the Secondary Threshold (the point at which employer NICs are levied), however for businesses that qualify for the Employment Allowance this will increase by £1,000 from £4,000 to £5,000 per annum with effect from 6 April 2022.

 Other announcements include:

• 5p per litre cut in fuel duty for 12 months (starting 6pm tonight, Wednesday 23rd March 2022)

• Basic rate of income tax to be cut from 20% to 19% from April 2024

• Review of taxes on business investment with changes to Capital Allowances and R&D tax reliefs to be announced in the Autumn Budget

• 5% VAT cut for households installing energy saving materials such as solar panels, heat pumps, insulation etc