Spring Statement: hard choices for challenging times
Intended as more of an update, rather than a mini-Budget, the UK’s growing cost of living crisis, along with soaring global prices for fuel, energy and food and the added pressure of the war in Ukraine, forced the Chancellor’s hand. So, on 23 March, Mr Sunak announced tax changes, some excepted and one not, intended to both to shield the most vulnerable, and mitigate the damage to the recovery.
Here are the key points:
National Insurance and income tax
The Chancellor may have ignored calls to abolish the planned increase to NICs from April, instead he increased the threshold at which contributions are paid, to £12,570 from July. This is a rise of £3,000 and represents a “simplification”, said some, equalising the NICs threshold with the personal income tax allowance.
For employers, the Employment Allowance that offset the Secondary Class 1 NI is also set to increase, from April.
Looking forward, the income tax basic rate will fall by 1%, to 19% from April 2024.
Fuel and VAT cut for going green
VAT on energy-saving equipment, such as solar panels, heat pumps and other devices to improve efficiency has been cut from 5% to 0% for a period of five years. So, if you’re installing such items, you could enjoy both cheaper bills and save tax.
We’ve all noticed an increase in prices at the pumps and, as expected, fuel duty was cut by 5p per litre. This was effective almost immediately and will last for one year.
As well as introducing new measures, the Spring Statement did flag up further changes that we can expect in the autumn Budget. The economic challenges may be set to continue, but with quality tax planning and guidance, from experts that can look at the bigger picture as well as at the detail, you can still optimise your finances.
We advise clients on a range of tax issues, so do get in touch today.
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