Having stated there would only be one annual Budget the Spring Statement 2022 broke the mold with pressure from the press and public with rising energy and other living costs due to the conflict in Ukraine. He acknowledged the increased costs and inflation which are having a major effect on living costs, in particular energy and fuel costs. In what was really a mini Budget he introduced a number of measures with some news for the future too:

  • An increase in the threshold at which individuals start to pay NIC whether employed or self employed from £9,880 to £12,570 from July 2022. This is the long awaited alignment between the tax and NI threshold.  This will save each person £356pa, and mean that directors on a basic salary will receive 1/12 of the £12,570 salary without deduction (but only from July)
  • Class 2 NIC for the self employed (the National Insurance “stamp”) will only be payable from April 2022 once profits reach £11,908, rather than the £6.7k small profits threshold. This will still build National Insurance credits for state pension etc
  • The employment allowance for employers which reduces the employers NI payable is to increase by a further £1000, meaning a further £7k salary will not attract employers NI
  • An immediate reduction in duty on diesel and petrol from 23 March for 12 months
  • While National Insurance costs and dividend tax are increasing from April 2022 by 1.25%, the Chancellor announced a 1% drop in basic rate tax from April 2024 which raises the question of how the shortfall will be funded

These measures will help a little but rising costs with inflation running at 6.2% the government will be under pressure in the months to come to help more. You should seek professional advice before taking any steps based on these contents. If you would like advice in the Spring Statement 2022 or other areas feel free to call. Alastair Wood, AW Accounting, Shrewsbury, Shropshire – Accountants who “speak your language”