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Spring Statement 2022

29 March 2022

The Spring Statement did not turn into the mini-Budget that some had expected. A number of significant announcements to support households through the ‘cost of living’ crisis were the immediate priority. The Chancellor also promised plans to encourage business investment and more favourable tax rates in the medium-term.

Key points:

  • Fuel duty is reduced by 5p per litre from 6pm on 23 March 2022 (for one year).
  • The Health and Social Care Levy goes ahead as planned from April 2022 (effectively increasing NIC rates for 2022/23).
  • Class 1 employees NIC - the Primary Threshold of employees NIC will rise from July 2022 – read more here.
  • Class 2 self-employed NIC – from April 2022, the starting threshold will increase to £11,908.
  • Employers NIC - the Employment Allowance (for smaller employers) increases to £5,000 for 2022/23.
  • The basic rate of income tax is to be cut by 1% to 19% from April 2024.
  • Household Support Fund – an extra £500m will be made available to Local Authorities to support vulnerable households.
  • R&D relief – part of the reforms being implemented from April 2023 block deductions for overseas R&D work but some exemptions have been confirmed (for regulatory reasons, eg clinical trials and geographical factors). In addition, companies will be able to claim R&D relief on projects supported by pure maths.
  • Further reforms to R&D relief will be considered in a consultation to be published in the summer – this may include an increase in the rate of relief to ensure the UK remains a competitive location for R&D.
  • Capital Allowances - The government will consider alternative options so that it is able to replace the super-deduction when it expires in April 2023
  • VAT on energy saving materials will be reduced from 5% to 0% from April 2022 to April 2027 (this includes insulation, solar panels and wind turbines).
  • A review of the Apprenticeship Levy (introduced in 2017 to encourage employers to use apprenticeships to upskill their workforce) will take place to determine whether the scheme is “doing enough”.
  • Tax reliefs – In the interest of creating a fairer and efficient system, the government plans to announce the  simplification or removal of a number of existing tax reliefs in the lead-up to 2024.
  • A review of Enterprise Management Incentives has concluded that they are fit for purpose and do not need to be reformed.

You can read the full statement from BDO UK on their Microsite