The Chancellor of the Exchequer has announced the Spring Statement, in this he said the Government had already taken significant steps to help with the cost of living. Including a cut to the Universal Credit taper rate and increase to work allowances and the £9 billion package to help households with rising energy bills.
The Spring Statement included further measures to help households in the form of an increase to the National Insurance Primary Threshold and Lower Profits Limit. A temporary 12 month cut on duty for petrol and diesel of 5p per litre.
The scope of VAT relief available for energy saving materials will help households improve energy efficiency and keep heating bills down.
Help for businesses
Small and medium sized businesses will benefit from business rates relief worth £7 billion over the next 5 years. The Annual Investment Allowance will be increased from £2000,000 to £1 million until March 2023. Businesses will also benefit from the cut to fuel duty and the Employment Allowance will increase to £5000 from April, this will equal a tax cut of up to £1000 for around half a million small businesses.
The tax plan for the Spring Statement set out to reform and reduce taxes – the focus being on helping families with the cost of living, creating conditions for private sector led growth and sharing the proceeds of growth fairly with working people. This will drive improvements in the living standards across the UK.
The Government will reform and reduce taxes in three ways
1/ Helping families with the cost of living. The Spring Statement increases the annual
National Insurance Primary Threshold and Lower Profits Limit from £9,880 to £12,570,
from July 2022. This aligns the Primary Threshold and Lower Profits Limit with the income
tax personal allowance. This will help almost 30 million working people, with a typical
employee benefiting from a tax cut worth over £330 in the year from July.
2/ Boosting productivity and growth by creating the conditions for the private
sector to invest more, train more and innovate more – fostering a new culture of
enterprise. To do this, the government intends to cut and reform business taxes, to create
a culture of enterprise and the conditions for private sector-led growth.
3/ Sharing the proceeds of growth fairly. The government will reduce the basic rate of
income tax to 19% from April 2024. This is a tax cut of over £5 billion a year and represents
the first cut in the basic rate of income tax in 16 years. Alongside tax cuts, the government
also wants to make the tax system simpler, fairer and more efficient, and will confirm plans
for reforms to reliefs and allowances ahead of 2024.
If you’re unsure of how the Spring Statement will affect you or your business contact AJR & Co Ltd.