On Wednesday 23rd March 2022, Chancellor Rishi Sunak delivered his Spring Statement in the House of Commons, providing an update on the health of the economy and deliver any updates on his Autumn Budget.
TBOS shares our feedback on the Spring Statement 2022…
National Living Wage
- The National Living Wage will increase to £9.50 from April 2022.
This increase will provide over £1,000 a year to a full-time worker on the National Living Wage but will have an impact on employers due to the increase in the cost of employing candidates.
- 1.25% hike in National Insurance Contributions from April 2022 to provide a new ring-fenced health and social care levy.
- £3,000 increase in National Insurance Threshold to £12,570 from July 2022
Whilst the Chancellor increased the National Insurance Threshold for Employees to give a tax cut of around £330 per year to workers this was not reciprocated for the Employers threshold. With the increase in the National Insurance Contributions by 1.25% this will mean employees will still see a reduction in their take home pay and an increase in cost of employing candidates for employers.
- 1.25% hike in Dividend Tax Rates from April 2022
Company shareholders will also need to plan their 2021-22 dividend distribution to see if there are some potential savings on taking a larger dividend instead of carrying over into the following year.
- Income Tax reducing from 20% to 19% in 2024
Whilst this was the first income tax cut in 16 years, it is a pledge that does not come into effect until 2024 and will provide a tax cut of 1p in every pound which could mean the average worker is £175 per year better off.
- Employment Allowance raising to £5,000 from April 2022
This increase of £1,000 to the Employment Allowance will mean that companies will pay less Class 1 National Insurance from April 2022.
- Scrapping of VAT on Energy Efficient Measures for next 5 years
The Energy Efficient Measures include the installation of solar panels, heat pumps, wind and water turbines and the insulating of homes.
Fuel AND Alcohol Duties
- Fuel Duty has been cut by 5p per litre till March 2023
- No change to current Alcohol Duty
The cut in Fuel Duty will be welcomed by most car owners although with the cost of fuel continuing to increase this will potentially only provide a saving of around £100 over the next 12 months for the average car driver. By having no change to the alcohol duty will be music to a recruiters ears (especially on those Thursday nights out).
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